CPS Final Review

Validation

Raising development impact through evaluation

EvaluationIndependent

Pacific ApproachValidation of the Country Partnership Strategy Final Review, 2016–2020

Validation Report

November 2020

Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

This document is being disclosed to the public in accordance with ADB's Access to Information Policy.

Independent Evaluation: VR-42

NOTE

(i) The fiscal years (FY) of the PIC-11 vary as follows:

Country Fiscal year end of the Small Pacific Island Countries governments

Cook Islands 30 June

Federated States of Micronesia 30 September

Kiribati 31 December

Nauru 30 June

Palau 30 September

Republic of the Marshall Islands 30 September

Samoa 30 June

Solomon Islands 31 December

Tonga 30 June

Tuvalu 31 December Vanuatu 31 December

(ii) In this report, “$” refers to United States dollars.

(iii) In preparing any country program or strategy, financing any project, or by making any

designation of or reference to a particular territory or geographic area in this document, the Asian Development Bank does not intend to make any judgments as to the legal or other status of any territory or area.

Director General Marvin Taylor-Dormond, Independent Evaluation Department (IED)

Deputy Director General Veronique N. Salze-Lozac'h, IED

Director

Walter Kolkma, Thematic and Country Division, IED

Team leader Melinda Sutherland, Senior Evaluation Specialist, IED

Team members Ma. Patricia Lim, Senior Evaluation Officer, IED Jullie Ann Palomares, Evaluation Assistant, IED

The guidelines formally adopted by the Independent Evaluation Department (IED) on avoiding conflict of interest in its independent evaluations were observed in the preparation of this report. To the knowledge of IED management, there were no conflicts of interest of the persons preparing, reviewing, or approving this report. In preparing any evaluation report, or by making any designation of or reference to a particular territory or geographic area in this document, the IED does not intend to make any judgments as to the legal or other status of any territory or area.

Abbreviations ADB – Asian Development Bank ADF AER COL

– – –

Asian Development Fund annual evaluation report concessional ordinary capital resources lending

CPS CPSFR

– –

country partnership strategy country partnership strategy final review

COVID-19 – Coronavirus disease DMC – developing member country DRM – disaster risk management EGM – effective gender mainstreaming EIRR – economic internal rate of return FCAS – fragile and conflict-affected situations FSM – Federated States of Micronesia GAP – gender action plan GDP – gross domestic product GEN – gender equity ICM – implementation completion memorandum JFPR – Japan Fund for Poverty Reduction MFF – multitranche financing facility NGE – no gender elements OCR – ordinary capital resources ODA – official development assistance O&M – operations and maintenance PARD – Pacific Department PBL – policy-based loan PCR – project completion report PFM – public financial management PIAP – project improvement action plan PIC-11 – 11 smaller Pacific island countries PNG – Papua New Guinea PPP – public–private partnership PRC – People’s Republic of China PRF – Project Readiness Facility PRIF – Pacific Regional Infrastructure Facility PSDI – Private Sector Development Initiative PSM – public sector management PSOD PVR

–

– Private Sector Operations Department project completion report validation report

RCI – regional cooperation and integration RETA – regional technical assistance RMI – Republic of the Marshall Islands ROBP – regional operations business plan SDG – sustainable development goal SGE – some gender elements SIDS SME

–

– small island developing states small and medium-sized enterprise

SOE – state-owned enterprise TA – technical assistance TASF – technical assistance special fund USP – University of the South Pacific WUS – water and other urban infrastructure and services

Currency Equivalents (as of 8 October 2020) Country Currency unit US rate compared with

1 unit of the national currency

Compared with $1.00

Cook Islands New Zealand Dollar NZD1.00 = $0.66 $1.00 = NZD1.52 Federated States of Micronesia

United States Dollar

USD1.00 = $1.00 $1.00 = USD1.00

Kiribati Australian Dollar AUD1.00 = $0.71 $1.00 = AUD1.41 Nauru Australian Dollar AUD1.00 = $0.71 $1.00 = AUD1.41 Palau United States

Dollar USD1.00 = $1.00 $1.00 = USD1.00

Republic of the Marshall Islands

United States Dollar

USD1.00 = $1.00 $1.00 = USD1.00

Samoa Samoan Tala WST1.00 = $0.38 $1.00 = WST2.61 Solomon Islands Solomon Island

Dollar SBD1.00 = $0.13 $1.00 = SDD7.98

Tonga Tongan pa’anga TOP1.00 = $0.43 $1.00 = TOP2.30 Tuvalu Australian dollar AUD1.00 = $0.71 $1.00 = AUD1.41 Vanuatu Vanuatu Vatu VUV1.00 = $0.01 $1.00= VUV112.54

Contents Acknowledgments ix

Executive Summary xi

Chapter 1: Introduction 1

A. Validation Purposes and Procedures 1

B. PIC-11 Development Context 2

C. National and Regional Development Plans 5

D. Pacific Approach, 2016–2020 and ADB Portfolio 6

E. ADB Operations during the Pacific Approach, 2016–2020 8

Chapter 2: Validation of the Country Partnership Strategy Final Review 13

Relevance 13

Effectiveness 20

Efficiency 22

Sustainability 25

Development Impacts 27

Private Sector Development and Nonsovereign Operations 33

ADB and Borrower Performance 35

Overall Assessment 36

Quality of Self-Evaluation 37

Chapter 3: Key Lessons, Issues, and Recommendations 38

Lessons 38

Issues 38

Recommendations to ADB 39 Appendixes 41

1. Linked Document 42

2. COVID-19 in the Pacific 43

3. Regional Operations Business Plans for 2016–2020 47

4. Overall Loans and Grants Approved, Ongoing and Completed during 2016–2019, by Sector 49

5. Overall Portfolio for Pacific during the Country Partnership Strategy Final Review Validation (2016–2019) 50

6. Validation Comments on Country Partnership Strategy Results Framework 73

7. Analysis of Performance against the Three Strategic Objectives 75

8. Completed Projects and Overall Validation Ratings 89

9. ADB Support for Climate Change Mitigation, Climae Change Adaptation and Disaster Risk Management During The Country Partnership Strategy 91

10. Overall Portfolio Rating: Percentage of Projects at Implementation Risk, 2014–Sep 2019 92

11. Contract and Disbursement Performance for PIC-11 Countries, 2014 to September 2019 (Based on Commitment) 93

12. Startup Compliance Performance for PIC-11 Countries, 2014 to September 2019 94

13. Regional Technical Assistance 96

14. PIC-11 Countries at a Glance (2016) 97

15. PIC-11 Countries at a Glance (2020) 98

16. Rating of Pacific Approach Strategic Obejectives 2016-2020 99

Acknowledgments This report was prepared by an independent evaluation team led by Melinda Sutherland, with Ma. Patricia Lim and Jullie Ann Palomares as team members. Director General Marvin Taylor-Dormond; Deputy Director General Véronique N. Salze-Lozac’h; Director, Walter Kolkma provided overall guidance. Consultants for the validation report were David Kavanamur, Graham Walter, Alexis Arthur Garcia, and Elizabeth Lat. Independent Evaluation Department (IED) staff members Joanna Asquith and Benjamin Graham commented on the initial draft. Jonathan Pryke of the Lowy Institute peer-reviewed the draft report. The team is grateful to Asian Development Bank (ADB) staff at headquarters and the Fiji, Republic of the Marshall Islands, Tonga, Tuvalu, and Vanuatu Resident Missions and Pacific Country Offices for their support, and to government officials and other stakeholders within these countries for useful discussions and inputs during the evaluation mission. The IED retains full responsibility for this report.

Executive Summary

The Asian Development Bank (ADB) Pacific Approach country partnership strategy (CPS), 2016–2020 serves as the operational framework for ADB operations for the Pacific region and the overall partnership strategy for the 11 smaller Pacific island countries (PIC-11): the Cook Islands, Federated States of Micronesia (FSM), Kiribati, Nauru, Palau, the Republic of the Marshall Islands (RMI), Samoa, Solomon Islands, Tonga, Tuvalu, and Vanuatu. It outlined a three-pronged thematic strategy focusing on reducing costs, managing risks, and enabling value creation. ADB’s active sovereign loans, grants, and technical assistance (TA) during 2016–2020 totaled $1,090 million in approvals, while nonsovereign operations were $102 million and cofinancing $994 million. Transport received the highest share of the sovereign lending program, at 28% of the total; followed by energy (23%), water and other infrastructure and urban services (16%), information and communications technology (14%), public sector management (12%), health (4%), and education (3%). Recognizing the unique challenges related to the small, remote, and fragile countries, ADB has scaled up support and undertaken several measures to improve its performance to support the PIC-11 including: increasing flexibility in procurement and contract requirements; improving staffing and management, e.g., establishing country offices in the PIC-11 that did not already have a resident mission; building project implementation capacities; and introducing innovative financing approaches such as the Pacific Renewable Energy Investment Facility and Project Development Facility. However, as a strategy, the Pacific Approach did not address a development goal, articulate objectives, differentiate between types of countries, or outline individual country needs, priorities, and strategies. ADB needs to improve the systems and processes to adequately measure, monitor, and report performance in the Pacific. The validation makes several recommendations for ADB’s future strategic approach and support to the PIC-11: (i) develop a Pacific strategy and approach, possibly interim, targeted at addressing the twin health and economic crises caused by the COVID-19 pandemic; (ii) develop a strategy for the PIC-12 (now including Niue) that articulates a transformative, differentiated, and fragile and conflict-affected situations (FCAS) approach; (iii) measure and monitor the performance of ADB support to the PIC-12 at both the strategic and project levels and use evidence-based reporting to learn, adapt, and better demonstrate success and ADB value addition; (iv) work more closely with other development partners to support stronger aid coordination in counterpart governments and improve absorptive capacity in the Pacific; and (v) build PARD capacity to deliver and manage the larger work program.

The Independent Evaluation Department (IED) of the Asian Development Bank (ADB) validated the Pacific Department (PARD) country partnership strategy final review (CPSFR) of the Pacific Approach, 2016–2020, which serves as the operational framework of ADB for the Pacific region [comprising 14 countries including Fiji, Papua New Guinea (PNG), and Timor-Leste] and the multi-country partnership strategy (CPS) for the 11 smaller Pacific island countries (PIC-11). Consistent with the CPSFR, the validation assessed approved, closed, and ongoing ADB operations in the PIC-11 (only) during the Pacific Approach

period to provide lessons and recommendations to inform ADB’s future Pacific strategy and program. In addition to information presented in the CPSFR, the validation used information gathered in February–March 2020 from in-country consultations in Fiji, Tonga, Tuvalu, and Vanuatu, and teleconferencing with the Republic of the Marshall Islands (RMI). The mission met with counterparts from departments and agencies, development partners, non-state actors, project beneficiaries, and staff of the Pacific Subregional Office (SPSO), the Pacific Liaison and Coordination Office (PLCO), the ADB country offices in the

xii Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020 countries visited, the Private Sector Development Initiative (PSDI), and the Pacific Regional Infrastructure Facility (PRIF).

Pacific Approach, 2016–2020 and ADB Support The Pacific Approach, 2016–2020 outlined a three-pronged thematic strategy focusing on (i) reducing costs of doing business and providing social services by improving connectivity, increasing access to information and communication technology (ICT), lowering energy costs, and creating a more enabling business environment; (ii) managing risks from economic shocks, natural disasters, and climate change impacts by strengthening institutional capacities, promoting sound public sector management (PSM), and building resilience to natural disasters; and (iii) enabling value creation by supporting private sector growth and investment through legislative and financial reforms and an improved business environment. These strategic priorities were seen to be applicable to all of the PIC-11. Benefiting from the expanded resources available because of a capital increase and higher Asian Development Fund (ADF) base allocations, ADB increased its sovereign portfolio in the PIC-11 from 37 active projects in 2015 ($706 million including cofinancing)—each of which were carried over to the Pacific Approach, 2016–2020 period—to a total of 84 projects at the end of 2019. ADB’s active sovereign loans, grants, and technical assistance (TA) during the strategy period 2016–2020 totaled $1,090 million in approvals, with additional cofinancing of $994 million. Nonsovereign operations totaled $102 million. The portfolio assessed by this validation includes programs approved before the strategy period and ongoing or completed during the strategy period. Allocations against the three strategic priorities can only be estimated, as the priorities are thematic in nature and thus many programs and projects can support more than one theme. Programs targeting cost reduction are the largest (55%) by volume, with reducing risks (22%), and enabling value creation (23%). Transport received the highest share of the sovereign lending program at $274 million (28%); followed by energy at $227 million (23%); water and other urban infrastructure and services (WUS), $156 million (16%); information and communication

technology (ICT), $135 million (14%); public sector management (PSM) $122 million (12%); health $34 million (4%); and education $32 million (3%).

Assessments The CPSFR rated ADB’s program in the PIC-11 from 2016 to 2020 successful overall. It rated the program relevant, effective, efficient, likely sustainable, and having satisfactory development impact. The CPSFR also rated the performance of ADB and the borrowers satisfactory. The validation finds the program overall less than successful and assesses the program relevant and efficient; but, less than effective, less than likely sustainable, and having less than satisfactory development impacts. The Pacific Approach, 2016–2020 was aligned with national development priorities in the PIC-11, with ADB’s corporate strategy and objectives, and with the priorities of development partners active in the region. The focus on the three strategic priorities helped address some development constraints in the PIC-11, including isolation from markets and resources, vulnerability to climatic and economic shocks, and limited opportunities for economic growth. A regional approach was expected to enable the PIC-11 to pool knowledge and resources and leverage greater economies of scale to achieve common development goals, but examples or evidence of this were not included in the CPSFR. The regional operations business plan (ROBP) demonstrates consistency with Strategy 2030, the regional cooperation and integration (RCI) Operational Plan 2019–2024, and with the priorities of the Pacific Approach, 2016–2020. However, it does not appear to be driven by the Pacific regional plans and strategies, e.g., Pacific Roadmap for Sustainable Development, which was endorsed by Pacific Leaders in 2017. The proportion of RCI projects to the total portfolio varied between 23% and 45% during 2016–2020, but these projects were not examined for their RCI results in the CPSFR. IED’s 2020 Annual Evaluation Review (AER) noted that less than half of all projects completed in the Pacific (14 developing member countries region-wide) are assessed successful, and that in the past 3 year period the percentage of successful projects has dropped from 59% in 2016–2018 to 42% in 2017–2019. While all PSM operations in 2017–2019 were assessed successful, overall regional performance was pulled down by low performance

Executive Summary xiii

in the infrastructure program, particularly the transport and WUS programs. Fluctuations in performance over the two timeframes are in part attributable to the small number of projects in the Pacific. The 2020 AER data also includes PNG and Timor-Leste, which has pulled down the rating. While this validation considered the 2020 AER, the AER was based only on completed projects. This validation also includes the assessment of ongoing projects, many of which have benefited from improvements in design and costing. ADB has also increased its staff and upgraded its presence in the PIC-11 countries, which should contribute to improved performance during the next long-term strategy.

Relevance. The Pacific Approach, 2016–2020 represented more of an operational framework, or implementation plan, for ADB operations than a strategy to support the PIC-11. It placed greater emphasis on operational and delivery priorities than previous strategies, with interventions being guided by the three strategic priorities. While it did not address a goal or provide strategic objectives, it did state that its three-pronged strategy addressed challenges for achieving more inclusive economic growth, job creation, and improved human development outcomes. It recognized country needs, as set out in the constraints analysis, but did not emphasize linkages to the individual country strategies or priorities of the PIC-11. The Pacific Approach applied to a larger set of countries, but the two largest Pacific developing member country (DMC) economies are not in the PIC-11. The lack of a useful results framework covering regional and country operations inhibits assessment of how ADB support contributed to the achievement of development outcomes and impacts. The three thematic strategic priorities of reducing costs, managing risk, and enabling value creation, are generic, allowing a broad range of projects to be considered, provided they address one of these themes. Sector interventions are not prioritized separately and are only loosely aligned with the three priorities, appearing in all three in some instances. The validation examined the alignment of investments with the three strategic priorities to better understand their relevance. Some programs and projects to reduce costs were well aligned with national development priorities, which highlighted the need for better connectivity and more renewable energy. Renewable energy projects,

using solar or wind power to replace diesel generation, are reducing diesel fuel imports and carbon emissions. The program under the second priority of managing risks was also relevant, as the PIC-11 have limited capacity to cope with economic and climatic shocks, highlighting the need to increase both disaster resilience and fiscal resilience and build economic buffers. The Pacific Approach, 2016–2020 appropriately emphasized the need for a vibrant private sector and a supportive public sector, however projects included in the enabling value creation priority were less clearly targeted toward promoting private sector growth and operations and financial inclusion. Promoting vibrant urban areas, supporting education and skills training to develop human capital, and strengthening institutional capacity are essential for increasing private sector investment and encouraging more equitable socioeconomic growth. Substantial overlap among the three strategic priorities makes it difficult to understand the rationale for which investments are included and excluded under each of the three priorities and why. Given the complexity of the program, had a sector-based strategy been used, ADB may have found it more feasible to establish and implement systems and processes to measure, monitor, and report performance at the strategic and project levels and attribute change (or value addition) to ADB’s support to the small, remote, and fragile, PIC-11. This difficulty was exacerbated because multi-country country operations business plan (COBP) reporting against the strategy occurs at the sector level. ADB is yet to determine the most strategic way to engage and deliver in the PIC-11. Beyond this, implementation of the Pacific Approach benefited from good coordination and cooperation and partnerships with other development partners, and from appropriate use of financing modalities. Of the five Strategy 2020 drivers of change, the Pacific Approach emphasized gender equity, good governance and capacity development, and partnerships.

Effectiveness. The CPSFR did not assess achievements against the Pacific Approach results framework, impeding ADB’s ability to provide evidence of effective performance and value addition. This validation examined effectiveness based on the project completion report validation reports (PVRs) and project completion reports

xiv Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020 (PCRs); the ratings of completed projects; indicators of the likely outcomes of the current projects; and the trend in portfolio implementation performance based on the 2020 AER. Of the 14 projects completed with PCRs, two were not rated by the operations department as effective. When validated, four of the nine PVRs assessed projects less than effective or ineffective. Nine IED validations of projects for a portfolio of 84 (30 of which were completed over the period), do not constitute a large enough sample to be used as the main basis for an effectiveness rating. Analysis of the ongoing and mature portfolio and the past portfolio does not indicate a positive performance trajectory. Overall, around half of the completed, mature, and nearly completed projects may be performing less than effectively. Projects categorized under the strategic priority of managing risks are assessed effective, but projects categorized against the priorities of enabling value creation and reducing costs are assessed less than effective. Private Sector Operations Department (PSOD) operations have been very small and, overall, the strategy for increasing private sector development has not been effective to date. Efficiency. PARD’s portfolio performance improved during 2016–2020, with projects rated on-track improving from 57% in 2017 to 73% in 2018; and contract award and disbursement performance was better than the ADB-wide average. However, half the completed projects are rated less than efficient, and ongoing projects continue to face delays. This applies mostly to infrastructure projects and is largely attributed to weak capacity in government, implementing agencies, and the contracting sector. The share of projects at implementation risk for 2014–2018 is worse than the ADB-wide average and for PARD as a whole, with more than half the projects in the Federated States of Micronesia (FSM), Palau, and RMI at risk, and Samoa not far behind. Solomon Islands and Vanuatu also have a high share of projects at risk, although near the ADB-wide average. Project readiness has started to improve. To address historical challenges, ADB has instituted a number of measures to improve project preparation, processing, and implementation. These include (i) creating a project implementation division in PARD and increasing the number of staff

in PARD and ADB’s field presence in the PIC-11; (ii) facilitating project processing and implementation with hands-on technical support and increased flexibility in procurement and contracting requirements; and (iii) leveraging innovative financing tools such as project design facilities to deliver flexible, programmatic financing, and creating separate project preparation and readiness tracks to allow faster implementation after projects are approved. These improvements improve the outlook on efficiency, especially in the next strategy period. Sustainability. Sustainability remains challenged by issues such as limited technical capacity and limited funding for operations and maintenance (O&M). Several transport and other infrastructure projects highlight the need for whole-of-life asset management systems including asset maintenance plans and budgetary appropriations. IED validations have historically downgraded ratings for sustainability based on poor O&M budgets, because where there is uncertainty about the likely sustainability of ongoing projects, it is not appropriate to assume a sound level of sustainability. This position is supported by the 2020 AER findings, and the situation is likely to be exacerbated by the adverse economic impact of a protracted coronavirus disease (COVID-19) pandemic. The validation mission’s discussions with government counterparts about asset maintenance highlighted the need for an asset management plan. All identified this as essential for sustainability, noting the need to address budget issues and technical capacity limitations. Counterparts also recognized the need for continued assistance from development partners. Several newer projects specifically include building capacity and improving systems for O&M to help improve the sustainability of infrastructure projects. Weak capacity is the most frequently cited root cause identified for why projects fail in the Pacific. The need for an increased emphasis on capacity building and the development of a longer-term and transformative approach to capacity building programs is apparent.

Development Impacts. While the CPSFR did not examine development impacts according to ADB’s strategic agenda or drivers of change, additional research undertaken by the validation found ADB support may achieve some positive development impacts through its projects. For example, submarine cable projects are expected to improve

Executive Summary xv

internet connectivity and strengthen the planning and delivery of public services, such as in health care and education, and cut internet costs by half for over 400,000 people. The renewable energy facility is expected to reduce carbon emissions through solar, wind, and hydropower, and upgrade the distribution system to include connection for rural communities. The transport infrastructure improvement programs are expected to rehabilitate key transport assets and reduce travel costs. Disaster resilience programs and PSM reforms are important for managing risks. The RMI Ebeye Water and Sanitation Project has helped to reduce the incidence of waterborne diseases on Ebeye since the reverse osmosis plant was commissioned in September 2017. Despite the above achievements, further progress is needed. Gender equity work, environmental sustainability, and RCI were assessed less than satisfactory. While investments contribute to climate proofing, they do not address the core or systemic issues associated with climate change or provide a transformative approach, which is unequivocally sought by all the Pacific island countries. Similarly, while ADB and other development partners have historically provided significant support to improve governance and capacity, this has not yet achieved the intended impact, indicating a need to rethink how this support is provided and shift toward longer-term and transformative approaches for capacity development. ADB performance. ADB has been flexible in its operations and provided regular support to projects. It took several measures to improve performance over 2016–2020. These include (i) greater flexibility in procurement and contract requirements; (ii) improvements in staffing and management; (iii) a stronger focus on building project implementation capacities; and (iv) the introduction and use of innovative financing approaches. However, ADB did not improve its systems or processes to measure, monitor, or report performance using evidence at the strategic level, which adversely impacts internal and external perceptions of ADB support. ADB measures to improve its efficiency in delivering support to the Pacific are expected to improve the effectiveness of support to the Pacific in the future. For this reason, ADB’s performance is assessed satisfactory.

Borrower performance. Governments demonstrate continued commitment to investing in high-impact social and physical infrastructure, establishing sound macroeconomic and sector development policies, and working with neighboring countries and development partners to strengthen RCI. Limited capacity is recognized by governments and development partners as a persistent constraint, and the PIC-11 remain reliant on external technical expertise in several key sectors, currently financed by development partners. In recognizing the limitations and capacity constraints, the governments actively seek development partner support and stress that this needs to be long-term and not tied to a short-term project impact.

Lessons When working in fragile countries, it is crucial to thoroughly address the unique country contexts and risks, and provide support using a differentiated approach. Grouping a diverse range of small, unique, fragile countries under a generic thematic strategy, without linking country level goals and priorities to the strategy or its results framework, is not consistent with the differentiated approach recommended for fragile and conflict-affected situations (FCAS) countries.

When programs do not measure and monitor performance at the strategic level, they are less likely to be able to demonstrate the success of a strategy and ADB value addition using evidence-based reporting. Furthermore, poor reporting impedes the ability to learn lessons from experience and impairs perceptions about ADB’s performance. Innovative financing approaches such as the Pacific Renewable Energy Investment Facility and the Project Development Facility can improve the project preparation and approval process. The new Pacific Disaster Resilience Facility is improving the capacity of governments to respond faster to disasters and assist affected persons quicker.

Absorptive capacity in the Pacific increases when ADB works in collaboration with other development partners to provide support jointly, e.g., through policy-based loans and grants, as the Joint Policy Reform Matrix approach reduces the burden on government counterparts. Agreement on Joint Policy Reform Matrixes helps to (i) ensure consistency of advice and approach, (ii) ensure

xvi Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020 government ownership and commitment, and (iii) reduce the burden on small governments that would otherwise need to engage separately with multiple development partners.

Issues

The economic crisis caused by COVID-19 has seriously affected the Pacific economies. Pacific countries were among some of the first in the world to recognize the likely impacts of COVID-19 and most were quick to close their borders, restrict domestic movement, and impose states of emergency. While these government measures were indisputably essential in preventing a health crisis, they have imposed significant costs on their people and economies, and this is especially so for the tourism dependent economies.

Successive ADB Pacific strategies and approaches have supported incremental change, illustrating the difficulty of advancing growth and development prospects in these challenging contexts. ADB is yet to articulate a differentiated strategy that optimally supports sustainable development outcomes and impacts in the Pacific.

Inadequate evidence-based monitoring and reporting of results against strategic priorities adversely impairs perceptions about ADB performance in the Pacific. The CPSFR provided limited evidence to enable IED to verify the success of the program. The validation therefore exerted significant efforts to find additional relevant information, but with limited success. The onus of the proof of delivery of results lies with the operations department’s final review. The lack of evidence is more serious given the history of weak performance, as documented by the success rates of completed operations in the Pacific.

The PIC-11 continue to grapple with the capacity challenges faced by all fragile countries, impacting absorptive capacity and the successful delivery of investments. This is despite ADB and development partners providing continuous capacity building support to the PIC-11. The growing scale, scope, sources, and nature of development assistance to the Pacific are leading to a proliferation of projects and programs and a more congested landscape, potentially impacting absorptive capacity. This demands better

coordination among partners and stronger efforts to improve aid management capacity in the PIC-11.

Underfunding of operations and maintenance and a lack of local technical capacity impairs project sustainability. This increases the risk of infrastructure failing to reach its anticipated design life, consequently diminishing intended benefits.

Recommendations to ADB The following five recommendations are elaborated further in the final chapter. Recommendation 1: Develop a Pacific strategy and approach, possibly interim, targeted at addressing the twin health and economic crises caused by the COVID-19 pandemic. It may not be prudent to establish a 5-year ‘business as usual’ Pacific strategy until the short- to medium-term impact of the COVID-19 pandemic is addressed. Recommendation 2: Develop a strategy for the PIC-12 (now including Niue) that articulates a transformative, differentiated, and FCAS approach. The strategy should not be confused with an implementation plan for the Pacific such as the Pacific Approach.

(i) The next strategy should define the context; state a development goal and objectives; demonstrate alignment with the 12 respective national development goals, strategies, and sectoral priorities (e.g., in a one-page annex for each country); outline an implementation approach, including a monitoring, evaluation, and learning plan; and include an integrated results framework that has clear links to regional and country priorities and activities as well as Strategy 2030 and its operational priorities.

(ii) A strategy that is focused on a goal of economic growth and human development, would enable ADB to work in areas of comparative advantage, including support for transport infrastructure, ICT, renewable energy, PSM [including support for better public financial management (PFM)], SOE reform, disaster risk management (DRM) and mitigation, disaster response, WUS, education, and health.

(iii) ADB should develop a transformative approach to capacity building and climate

Executive Summary xvii

change. Current capacity building efforts primarily focus on improving national capacity to deliver ADB investments, and thus do not address the root causes or fundamental challenges of weak capacity that are inherent in fragile countries. A transformative approach to climate change (Strategy 2030, Operational Priority 3) should also be adopted, shifting the focus from projects that provide climate proofing to more strategic programs and approaches that support adaptation and address the long-term impacts of sea-level rise and the forced migration of affected populations.

Recommendation 3: Measure and monitor the performance of ADB support to the PIC-12 at both the strategic and project levels and use evidence-based reporting to learn, adapt, and better demonstrate success and ADB value addition.

Recommendation 4: Work more closely with other development partners to support stronger aid coordination in counterpart governments and improve absorptive capacity in the Pacific.

Recommendation 5: Build PARD capacity to deliver and manage the larger work program.

(i) ADB could employ more international staff from Pacific countries, as only eight of the current 1,287 international staff are from a Pacific country (0.62%). While this is a reasonable representation of Pacific countries based on financial membership, the tacit knowledge that comes from employing people from the Pacific would improve ADB’s ability to use a differentiated approach, which is key to successfully working in an FCAS environment.

(ii) Pacific Country Office staff could be more involved in the planning and implementation of country programs and projects; and in monitoring, reporting, and assessing achievements at the country level, and contributing to regional and overall strategic objectives, not just at the project level.

(iii) FCAS-focused training for PARD staff should include topics such as: how to engage in meaningful policy dialogue with governments; how to design and implement projects in limited-capacity and high natural disaster contexts; and how to systematically assess capacity and design long-term programs to strengthen individual, organizational, broader sectoral and institutional capacity.

18 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016-2020

CHAPTER 1

Introduction

A. Validation Purposes and Procedures 1. This report was prepared by the Independent Evaluation Department (IED) of the Asian Development Bank (ADB) to validate the findings and recommendations of the country partnership strategy final review (CPSFR),1 prepared by the Pacific Department (PARD) for the Pacific Approach country partnership strategy (CPS), 2016–2020.2 The Pacific Approach, 2016–2020 serves as ADB’s operational framework for the Pacific region and is the overall country strategy for the 11 smaller Pacific island countries (PIC-11): the Cook Islands, Kiribati, the Federated States of Micronesia (FSM), Nauru, Palau, the Republic of the Marshall Islands (RMI), Samoa, Solomon Islands, Tonga, Tuvalu, and Vanuatu.3 The CPSFR assessment covered loan and grant projects and technical assistance (TA) approved or implemented during 2016–2020, focusing on performance in the PIC-11. While the Pacific Approach was written as an operational framework to cover all Pacific developing member countries (DMCs) (at the time), including Fiji, Papua New Guinea (PNG), and Timor-Leste, the latter three countries have their separate CPSs, and so the performance of these countries was discussed in their respective CPSFRs, (two of which have been validated by IED).4 This report therefore confines itself to validating the performance of the program for the PIC-11. The CPSFR assessed ADB’s operations in the PIC-11 successful overall: relevant, effective, efficient, likely sustainable, and with satisfactory development impacts. 2. The purpose of this report is to (i) validate the findings and assessments of the CPSFR with respect to the relevance, effectiveness, efficiency, sustainability, and development impacts of the strategy and 11 country programs; (ii) assess the quality of the self-evaluation in the results assessment; and (iii) identify issues, lessons, and recommendations for the CPS, 2021–2025 and for improving the design and implementation of current and future ADB projects in the PIC-12 (including Niue). 3. The report was prepared following the 2015 Guidelines for the Preparation of Country Assistance Program Evaluations and Country Partnership Strategy Final Review Validations.5 Consistent with the way performance was reported in the CPSFR, the validation assesses performance against the Pacific Approach’s three strategic priorities (unlike most other CPSFRs, in this case there were no sector program assessments). The assessment is based on (i) a review of documents, including the Pacific Approach, 2016–2020, the CPSFR, country operations business plans (COBPs) and regional operations business plans (ROBP), reports and recommendations of the President, project completion reports (PCRs), PCR validation reports (PVRs), TA completion reports (TCRs), other IED evaluations pertinent to the PIC-11, and country-specific national development strategy documents; (ii) consultations in Fiji, Tonga, Tuvalu, and Vanuatu, and teleconferencing in February–March 2020 with RMI stakeholders, including government and

nongovernment entities and beneficiaries of development assistance; and (iii) discussions with staff of the Pacific Subregional Office, Pacific Liaison and Coordination Office, ADB missions in the countries

1 ADB. 2019. Country Partnership Strategy Final Review: Pacific Approach, 2016–2020. Manila; The Pacific Approach 2016–2020

and CPSFR do not cover Niue, the newest member country, which joined in 2019. Niue is expected to be included in the next ADB strategy.

2 ADB. 2017. Pacific Approach, 2016–2020. Manila. 3 IED. 2019. Fiji: Validation of the Country Partnership Strategy Final Review, 2014-2018. Manila: ADB; and IED.2020. Papua New Guinea: Validation of the Country Partnership Strategy Final Review, 2016–2020. Manila: ADB; This validation excludes Fiji and Papua New Guinea as they have their own respective CPS.

4 The most recent Fiji CPSFR validation was published in 2019 and the PNG CPSFR validation in 2020. 5 IED. 2015. Guidelines for the Preparation of Country Assistance Program Evaluations and Country Partnership Strategy Final Review Validations. Manila: ADB.

2 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

visited, the Private Sector Development Initiative (PSDI) and the Pacific Region Infrastructure Facility (PRIF) in Sydney, and other development partners.

B. PIC-11 Development Context 4. The PIC-11 are comprised of thinly stretched public administrations, in relatively young and independent states. Many exhibit common characteristics such as political, social, and environmental fragility as well as vulnerability to natural disasters and the effects of climate change. Most of the PIC-11 have achieved significant levels of development and exhibit impressive human development relative to their per capita incomes. Many of the countries benefit from relatively high social spending, significant development assistance, and informal social safety nets (e.g., from remittances). Extreme poverty is rare and the average life expectancy and literacy levels are high. 5. Economic context. Small, remote, and fragile, the PIC-11 face many natural constraints and external shocks that make achieving sustainable and inclusive growth challenging. Their high exposure to climate change and natural disasters, small size, geographic isolation, dispersed populations, narrow economic base, capacity constraints, and limited resources increase the costs of providing services and doing business; and make the PIC-11 extremely vulnerable to economic shocks. The increased costs of doing business and the inability to realize economies of scale impede the provision of public services and infrastructure. Transport costs are particularly high, while the fixed costs of administration and service delivery are carried by a relatively small number of taxpayers. PIC-11 are remote from large international markets and from each other, which together with the similarity of their marketable domestic outputs, has limited inter-island economic linkages. 6. The PIC-11 have limited natural resources, yet control vast tracts of ocean and seabed by virtue of their remoteness. Most have a small land mass: excluding the Solomon Islands (28,400 km2) and Vanuatu (12,200 km2), the other nine countries average only 700 km2 each. Some countries have little or no arable land (Kiribati, Nauru, RMI, and Tuvalu). National populations are dispersed across numerous islands ranging from four in Samoa to over a hundred in the Solomon Islands. Their geographic dispersion and extreme remoteness from larger markets makes them completely distinct from other small island developing states (SIDS) around the world; they are unique in their combination of size and remoteness. 7. Economic growth in the PIC-11 has been low over the past decades, lagging significantly behind that of other developing countries. While the constraints noted above are a major cause, limited capacity and poor policy and institutional environments have exacerbated this problem. Growth over the past 3 years has averaged around 2%-2.5 % for most countries (Table 1). The Cook Islands and Tuvalu have fared better than others. For example, the Cook Islands have benefited from growth at over 4% and gross domestic product (GDP) per capita of just over $19,000 in 2018. In July 2019, the Cook Islands graduated from middle income to higher income status. The Cook Islands has free association with New Zealand, which provides for free movement between the two countries.

Table 1: Latest Pacific Economic Updates (Pre Coronavirus Disease Update)

Gross Domestic Product Growth (%, per annum)

Inflation (%, annual average) Fiscal Balance (% of Gross

Domestic Product) Countries 2018e 2019p 2020p 2018e 2019p 2020p 2018e 2019p 2020p Cook Islands 8.9 4.2 4.5 0.4 (0.2) 1.5 4.0 1.7 (1.4) FSM 0.4 2.7 2.5 1.4 0.7 1.5 10.0 7.0 10.0 Kiribati 2.3 2.3 2.3 2.1 2.3 2.2 (20.1) (23.2) (20.8) Marshall Islands

2.5 2.3 2.2 0.8 0.5 1.0 2.6 2.2 3.0

Nauru (2.4) (0.5) 0.1 3.8 2.5 2.0 14.2 4.9 0.2 Palau 1.5 (0.5) 1.0 2.0 1.0 2.0 6.5 2.0 0.6 Samoa (2.2) 2.5 3.5 3.7 2.2 2.0 0.1 (0.2) (1.2)

Introduction 3

Gross Domestic Product Growth (%, per annum)

Inflation (%, annual average) Fiscal Balance (% of Gross

Domestic Product) Countries 2018e 2019p 2020p 2018e 2019p 2020p 2018e 2019p 2020p Solomon Islands

3.8 2.8 2.7 3.5 2.0 3.0 (0.6) (1.2) (2.2)

Tonga 0.4 1.6 2.5 5.3 3.5 3.3 3.0 1.4 0.9 Tuvalu 4.3 4.1 4.4 1.8 3.4 3.5 33.9 (1.1) 1.8 Vanuatu 3.2 3.0 2.8 2.3 2.0 2.2 4.1 1.0 (1.0)

FSM = Federated States of Micronesia, e = estimated, p = projected. Sources: ADB. 2017. Pacific Economic Monitor – December 2017. Manila; ADB. 2018. Pacific Economic Monitor – December 2018. Manila; and ADB. 2019. Pacific Economic Monitor – December 2019. Manila.

8. Most PIC-11 countries have close links to developed countries. Only Tonga, Samoa, Solomon Islands, and Vanuatu have their own currencies. Kiribati, Nauru, and Tuvalu use the Australian dollar; the Cook Islands uses the New Zealand dollar; and Palau, FSM, and RMI use the United States (US) dollar. Palau, FSM, RMI, Nauru, Kiribati, and Tuvalu have sizeable trust funds, which are likely to have been significantly impacted as a result of the coronavirus disease (COVID-19).6 A summary of the early impact of COVID-19 in the Pacific is in Appendix 2. Palau, FSM, and RMI have entered into Compacts of Free Association with the United States of America (USA), which in addition to fund transfers to the trust accounts, allows citizens to study and work in the USA. Cook Islanders have dual nationality with New Zealand and can live/work there. Many Samoans have dual New Zealand nationality. Many Tongans have dual nationality with Australia or New Zealand due to long term ties and family movements. Nauru has close links with Australia due to past formal administration links and many citizens have dual nationality. These links are important as they provide outlets for employment and mobility; however, they are not available for the Solomon Islands, Vanuatu, Kiribati, or Tuvalu. 9. Social context. The Pacific islands share common characteristics, but there is such a high degree of diversity that it is inappropriate to view the countries as a collective social or economic identity.7 The PIC-11 fall into three ethnic or cultural groups: Melanesia (Solomon Islands and Vanuatu); Micronesia (FSM, Kiribati, Nauru, Palau, and RMI), and Polynesia (Cook Islands, Samoa, Tonga, and Tuvalu). The islands in Polynesia are more internally homogenous in terms of culture and language (and origins), whereas Micronesia and Melanesia are more diverse and have more distinct groupings within them (including Polynesian outliers). The incidence of poverty is widespread, although extreme poverty is relatively uncommon with much of the populations depending on subsistence living. While formal social networks are not in place, family ties are important. Gender inequality inhibits development throughout the region, with gender based violence common in many countries, notably within Melanesia. 10. Fragility and other challenges. During 2019, 10 DMCs were classified by ADB as fragile and conflict affected situations (FCAS) that demonstrate fragility, eight of which are Pacific countries: Kiribati, FSM, Nauru, PNG, RMI, Solomon Islands, Timor-Leste, and Tuvalu. While all Pacific countries exhibit multiple vulnerabilities, six of the PIC-11 are classified as FCAS due to vulnerability to external shocks and weak institutional capacity and governance. The PICs are exposed to a disproportionate number of natural disasters (e.g., cyclones, earthquakes, etc.) and the effects of climate change (e.g., rising sea levels). Six Pacific countries are in the top 15 World Risk Index, which identifies global disaster hotspots i.e., countries where high exposure to natural disasters and climate change coincide with very vulnerable societies.8 Demonstrating the high vulnerability of Pacific islands to disasters, between 1980 and 2016, 204 natural disaster observations were recorded in 12 Pacific countries, which is equivalent to a 46%

6 The trust funds act as international sovereign wealth funds, established to provide income to cover shortfalls in the national

budget, underpin economic development, and help these countries achieve greater financial autonomy. The market value of the trust funds dropped during the global financial crisis, and it is similarly anticipated that they will be devastated by the impact of COVID-19.

7 IED’s 2015 corporate evaluation of ADB Support to Small Pacific Island Countries noted that, given this diversity, ADB and donor efforts to squeeze PICs into a common mold to facilitate programming of assistance are understandable, but often impractical and inappropriate.

8 Vanuatu and Tonga occupy the top two positions.

4 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

probability of getting hit by a disaster in any given year.9 Frequent physical shocks can have large impacts on small economies. From 1950 to 2013, extreme natural events have affected more than 9.2 million people in the Pacific and caused damage in excess of $3.2 billion, with tropical cyclones being the major

cause of this loss and damage.10 In April 2020, Cyclone Harold tore through Vanuatu, Fiji, and Tonga.11 In some places in Vanuatu, the devastation was worse than that experienced during Cyclone Pam, which hit Vanuatu in March 2015, killing at least 15 people and leaving the country with a damage bill of nearly $600 million—more than half of the country’s annual GDP.12 11. The accelerating pace of global climate change will further increase the frequency and severity of climate events impacting the islands, a trend that is already well documented in recent years. Rising sea levels will have catastrophic effects on low-lying countries and regions, in particular the atoll countries. This means that projects for climate and disaster resilience and adaptation will need to be scaled up dramatically. Pacific governments have already begun to consider more radical adaptation measures such as internal and external population relocation and large-scale land reclamation and elevation projects, with the expectation that their major development partners will increase their focus and support in these areas. 12. Private Sector Development. Robust and vibrant private sectors are needed in the PIC-11 to increase formal employment, investment, and entrepreneurship, and thus support sustainable and inclusive economic growth and reduce poverty. Private sector development in the PIC-11 is challenged by geographic isolation, small market size, and inadequate infrastructure. Private sector development is needed because these intractable problems are often compounded by preventable ones, such as outdated laws, limited access to credit, overbearing public sectors, and poor competition. The preventable impediments to private sector-led growth reduce productivity and prosperity, and prevent long-term growth. Financial sectors in the PIC-11 are small, with weak institutions and financial regulations, and consequent risks. The financial sector in these countries is underdeveloped, with a low private sector credit to GDP ratio. Businesses of all sizes have difficulty securing commercial finance and the small and medium-sized enterprises are particularly constrained by lack of access to credit. 13. Development assistance to the region. When measured by aid inflows as a proportion of GDP, the Pacific is the most aid-dependent region in the world. The region has seen steady growth in the scale and scope of development assistance, and the nature of some assistance has evolved, with much of it driven by the evolving geopolitical interests of bilateral development partners. This growth and evolution in aid has come from both traditional development partners, many of whom, like ADB, have scaled up their allocations to the Pacific; as well as new bilateral, multilateral, and other types of partners, such as international non-governmental organizations. This has led to a proliferation of development projects and initiatives across many sectors and thematic areas, and a much more congested development landscape in the region. This has, in turn, raised the critical need for better coordination and harmonization among development partners, including in the areas of co-financing and monitoring and evaluation. It also highlights the need to reduce the administrative burden on government agencies (so as to ensure absorptive capacity), as well as to strengthen their capacities over the long term, not only their capacity to manage donor projects and comply with their requirements, but also to strengthen their overall organizational capabilities and effectiveness. 14. From 2011 to 2016, the Pacific received an average of $2 billion in foreign aid each year, which was equal to 6.5% of the region’s GDP.13 When PNG and Fiji are removed from the regional GDP (70%

9 D. Lee, H. Zhang, and C. Nguyen. 2018. The Economic Impact of Natural Disasters in Pacific Island Countries: Adaptation and

Preparedness. IMF Working Paper Asia and Pacific Department WP/18/108. Washington, DC. 10 M. Bonte and S.Cook. Regional Disaster Risk Assessment, Pacific Economic Monitor December 2013. ADB: Manila. 11 C. Graue, A. Weedon and L. Fox. 2020. Tonga braces for Cyclone Harold damage after destruction in Fiji and Vanuatu. ABC News.

9 April 2020. https://www.abc.net.au/news/2020-04-09/cyclone-harold-vanuatu-damage-fiji-tonga-coronavirus/12136018. 12 A. Connors. 2016. Cyclone Pam: Vanuatu one year on. ABC News. 15 Mar 2016. https://www.abc.net.au/news/2016-03-

13/cyclone-pam-vanuatu-one-year-on/7242620. 13 A. Dayant. 2019. Follow the money: how foreign aid spending tells of Pacific priorities.

Introduction 5

and 14% of the region’s GDP respectively), the average Pacific economy received official financing flows equivalent to 31% of its GDP.14 When only looking at official development assistance (ODA), Australia is the leading donor to the region, providing 45% of all aid, followed by New Zealand (9%), the People’s Republic of China (PRC) (8%), the United States (8%), and Japan (6%). ADB accounts for 5% while the World Bank accounts for 4% of all ODA distributed to the Pacific. 15. The sectoral distribution of ODA to the Pacific shows that governance is the largest sector supported, with 24% of total aid to the region. This is followed by transport (14%), health (13%) and education (11%); and the other sectors obtain between 7% and 2%. Infrastructure (defined as the combination of transport, energy, telecommunications, and water and sanitation) receives 21% of total aid to the region. 16. Tradition creditors provided over 60% of all official lending to the Pacific.15 Cumulative loan disbursements to the Pacific from 2011–2017 show that ADB provided the highest share at 41%, and continues to serve as the leading source of new official loans to the Pacific.16 The PRC provided 37%, followed by the World Bank (12%), and Japan (7%). Small contributions were also provided by the International Monetary Fund (IMF) and Canada.

C. National and Regional Development Plans 17. National Strategies and Plans. Eight of the PIC-11 have a current national development strategy or plan.17 Kiribati, RMI, and Samoa had national development plans at the commencement of the Pacific Approach, 2016–2020; however, these have subsequently expired and are yet to be replaced. The development plans for the Cook Islands, Palau, and Tuvalu will reach their natural conclusion in 2020. While regional concerns and the need for regional cooperation have been discussed in the Pacific Islands Forum for many years, there is no formal overall strategy for regional cooperation and development in the Pacific. 18. Regional Plans. There has been growing subregional cooperation among leaders in Micronesia, Melanesia, and Polynesia, as well as a growing number of regional frameworks and strategies in key sectors and thematic areas. The Pacific Plan, endorsed by Forum Leaders at the Pacific Islands Forum meeting in Port Moresby in 2005, was designed to strengthen Pacific regional integration and cooperation.18 Its four key pillars were designed for development progress: economic growth, sustainable development, good governance, and security. As a living document, it stated that the Pacific, as a region, must work to address these challenges to raise living standards, increase access to opportunity and stimulate pro-poor growth for its peoples. The Pacific Plan focused on initiatives to be delivered at the regional level and as such it has often been read as a Pacific regional development plan. 19. The Framework for Pacific Regionalism was endorsed by Pacific Islands Forum Leaders in July 2014, and replaced the Pacific Plan.19 The Framework provides a vision for a region of peace, harmony, security, social inclusion, and prosperity; and is intended to support focused political conversations and

14 PNG and Fiji are included in the Pacific Approach operational framework, but have their own CPSs. 15 Tradition creditors are international development lenders that are members of the Organisation for Economic Cooperation and

Development, Development Assistance Committee (OECD DAC). 16 R. Rajah, A. Dayant, J. Pryke. 2019. Ocean of Debt? Belt and Road and Debt Diplomacy In the Pacific. Lowy Institute: Sydney; This

includes all Pacific countries covered under the Pacific Approach operational framework, including those with separate country strategies such as PNG and Fiji.

17 The following eight small pacific island countries have current national development strategies or plans: Cook Islands (Cook Islands: National Sustainable Development Plan 2016–2020); FSM (Strategic Development Plan 2004–2023); Nauru (Nauru National Sustainable Development Strategy 2005–2025); Palau (Palau 2020: National Master Plan for Development); Solomon Islands (Solomon Islands National Development Strategy 2016–2035), Tonga (Tonga Strategic Development Framework, 2015–2025); Tuvalu (Tuvalu: National Strategy for Sustainable Development, 2016–2020); and Vanuatu (Vanuatu 2030: The People's Plan. National Sustainable Development Plan. 2016–2030).

18 Pacific Islands Forum Secretariat. 2007. The Pacific Plan for Strengthening Regional Cooperation and Integration. Suva. 19 Pacific Islands Forum Secretariat. 2014. The Framework for Pacific Regionalism. Suva.

6 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

settlements that address key strategic issues, including shared sovereignty, pooling of resources, and delegation of decision-making. Rather than providing a list of regional priorities, it sets out a robust process through which regional priorities will be identified and implemented. Its principal objectives were similar to those in the Pacific Plan: (i) sustainable development that combines economic social, and cultural development in ways that improve livelihoods and well-being and use the environment sustainably; (ii) economic growth that is inclusive and equitable; (iii) strengthened governance, legal, financial, and administrative systems; and (iv) security. 20. The Pacific Roadmap for Sustainable Development was endorsed by Pacific Leaders in 2017.20 It guides regional responses for the achievement of the 2030 Agenda and the Sustainable Development Goals (SDGs) within the context of national plans and priorities, the SIDS Accelerated Modalities of Action

(SAMOA) Pathway21, and the Framework for Pacific Regionalism.22 It was prepared by the Pacific SDGs Taskforce through an open, consultative and country-driven process, and is premised on the underlying principle of leaving no one behind. A first quadrennial report has been prepared and sets out progress made in the Pacific region toward achieving the SDGs.

D. Pacific Approach, 2016–2020 and ADB Portfolio 21. The Pacific Approach, 2016–2020 serves as the operational framework for ADB operations for the Pacific region (which had 14 countries at the time of its issuance) and the overall partnership strategy for the PIC-11. The purpose or aim of the strategy is not articulated in the document or results framework. The Pacific Approach, 2016–2020 outlined a three-pronged thematic strategy focusing on (i) reducing costs, (ii) managing risks, and (iii) enabling value creation, to achieve “more inclusive economic growth, job creation, and improved human development outcomes in the PIC-11.”23 ADB operations were to be implemented through sector-based interventions aligned to these three thematic areas, also referred to as strategic priorities. 22. The Pacific Approach, 2016–2020 focused on common development needs and challenges in the PIC-11, which invited a regional approach and provided opportunities for cross-country learning and operational efficiencies. Implementation was to draw on stronger support through higher levels of financial assistance, fragile-sensitive approaches to address challenges, increased use of regional approaches, an enhanced focus on private sector development, leveraged development partner coordination, and improved ADB performance to deliver support. The Pacific Approach, 2016–2020 was intended to be read in conjunction with the PIC-11 COBPs and associated country strategic analyses, as

well as the ROBP for the Pacific region.24 The Pacific Approach, 2016–2020 succeeded ADB’s Pacific Approach, 2010–201425 and Interim Pacific Approach, 201526, which contained a development goal, agenda, operational priorities, drivers of change, and results framework.27

20 Pacific Islands Forum Secretariat. 2017. The Pacific Roadmap for Sustainable Development. Suva. 21 United Nations General Assembly. 2014. SIDS Accelerated Modalities of Action (SAMOA) Pathway. A/RES/69/15. New York. 22 SIDS Accelerated Modalities of Action (SAMOA Pathway), adopted in 2014, at the UN Third International Conference on Small

Island Developing States, as the overarching framework for guiding global, regional, and national development efforts in small island developing States.

23 ADB. 2017. Pacific Approach, 2016–2020. Manila. p.9. 24 Individual country operation business plan for the 11 PICs were last prepared for 2017–2019. 25 ADB. 2009. ADB’s Pacific Approach, 2010–2014. Manila. 26 ADB. 2015. Interim Pacific Approach, 2015. Manila. 27 Pacific Approach, 2010–2014 and the Interim Pacific Approach, 2015 presented a goal of “sustained and resilient, improved

standards of living”, which supported the vision of the Pacific Plan, namely a region of peace, harmony, security, and economic prosperity, so that all of its people can lead free and worthwhile lives. It planned to foster connectivity, consensus, and a stronger community through (i) inclusive and environmentally sustainable growth, (ii) good governance, and (iii) regional cooperation and integration. The previous operational priorities included transport; information and communication technology (ICT); energy; urban development, water, and sanitation; and education. Drivers of change identified for the previous strategy included improved private sector environment, public sector management, capacity development, climate change adaptation and mitigation, development partnerships, and gender mainstreaming.

Introduction 7

23. Reducing Costs of doing business and providing social services was to be achieved by improving connectivity through land, sea, and air links; increasing access to ICT; lowering energy costs; and creating a more enabling business environment. Transport infrastructure was to be used to improve domestic and regional connectivity, with operations to focus on land, sea, and air transport. This was assessed to be critical for moving goods to international markets (in and beyond Asia and the Pacific) and stimulating and capitalizing on trade and tourism opportunities. Information communication technology (ICT) infrastructure was to diminish geographic isolation. ADB was to sustain its financial support for undersea cable systems, complementing this by strengthening the institutional and regulatory environment for ICT, exploring applications in e-health, e-education, and e-governance. 24. Under this priority, ADB would also provide support to reduce the cost of electricity and reduce fossil fuel imports, ADB was to continue to lead the shift to renewable energy in the region and help countries improve energy security, transition to low-carbon economies, and expand energy access. To help governments reduce the costs of doing business ADB was to support governments undertaking business environment reforms, modernizing taxation systems, improving government service delivery [including by state-owned enterprises (SOEs)], facilitating access to credit, and widening access to finance. ADB was also to collaborate with governments to create policy and institutional frameworks for public-private partnerships (PPPs), and help identify and structure potential PPP opportunities. 25. Managing Risks from economic shocks, natural disasters, and climate change impacts was to be achieved by strengthening institutional capacities and promoting sound public sector management (PSM); building resilience to climate change and natural disasters; safeguarding sensitive natural resources; and improving health and social protection services. ADB was to strengthen economic and public financial management (PFM) to protect PIC-11 populations from hardship during financial and economic shocks; and strengthening country capacity to withstand financial and economic risks by strengthening public finance and macroeconomic management. Policy-based lending programs and TA were to support reforms and augment sovereign wealth funds, which are used to smooth volatile revenue performance whilst concurrently providing a means to distribute revenues over future generations. ADB was to scale up climate change adaptation and mitigation and disaster risk management (DRM) to increase resilience in the PIC-11 by identifying, assessing, and managing climate and disaster risks during the project cycle to strengthen the resilience of infrastructure investments. Projects involving clean energy development and energy efficiency improvements were to be prioritized to support climate change mitigation. ADB was to work closely with government partners to strengthen country systems for environmental safeguards. 26. Under this operational strategy ADB would also support improved health outcomes and social protection programs by (i) developing integrated, climate-proofed health projects in partnership with technical agencies; (ii) optimizing the health outcomes of infrastructure investments (transport, ICT, energy, urban development, and water and sanitation); and (iii) selectively supporting regional public health initiatives to secure economies of scale in areas such as vaccination and health insurance. All ADB-supported health projects were to mainstream gender to improve women’s access to health services and prevent and respond to gender-based violence, and strengthen country capacity for gender-sensitive planning and project development. Support for social protection was to focus on reducing vulnerability and inequality. 27. Enabling Value Creation was to be achieved by supporting private sector growth and investment through legislative and financial reforms, private sector operations, promoting financial inclusion, raising the performance of the public sector, investing in urban infrastructure, and building human capacities through education and skills development. The Pacific Approach, 2016–2020 includes six priority areas for value creation: (i) expanding efforts to create a more enabling environment for the private sector;28 (ii) engaging directly with the private sector to support more investments; (iii) supporting public sector

28 Private Sector Development Initiative established in: Technical Assistance administered by ADB and financed mostly by the

Australian and New Zealand Governments (see paras.120–121).

8 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

reform to help PIC-11 governments focus on core service provision, manage their public workforce more efficiently, and open new opportunities for competitive private sector operations; (iv) promoting livable, economically vibrant urban areas by favoring an integrated approach to the provision of water and other urban infrastructure and services (WUS); and (v) supporting education and skills training to develop human capital by ensuring women have access to educational opportunities and expanding the use of ICT to improve the quality, management, and cost efficiency of education service delivery.

E. ADB Operations during the Pacific Approach, 2016–2020

1. Planned ADB PIC-11 Program 28. At the beginning of the Pacific Approach, 2016–2020 period, six of the PIC-11 were classified as FCAS countries, namely, FSM, Kiribati, Nauru, RMI, Solomon Islands, and Tuvalu, requiring a differentiated approach for each country. By 2020, the number of FCAS PICs had increased to also include Palau and Vanuatu. The PIC-11 include ADB group A, B, and C countries, 10 of which are Asian Development Fund (ADF)-eligible. Nine PICs are Group A countries and are eligible for ADF grants and concessional ordinary capital resources (OCR) lending (COL). In 2018, Kiribati, FSM, Nauru, RMI, Samoa, Tonga, and Tuvalu retained their high debt distress classification, and received 100% of their country allocations in grants. The debt distress classification of Solomon Islands and Vanuatu were assessed to be moderate and they received 50% of their country allocations in grants in accordance with the ADF grants framework. The proportion of grants for the 2020–2022 resource allocations will be determined by future annual debt distress classifications in accordance with the ADF grants framework. Palau is a Group B country–eligible for COL and regular OCR lending. Its final allocation depends on available resources and the outcome of the country performance assessments. Cook Islands is a Group C country —with access to regular OCR only. 29. The Pacific Approach, 2016–2020 did not set out the overall expected allocation to the 11 countries, or the likely distribution to different sectors in the 11 countries. For this information, one has to go to the COBPs. However, these cover a 3-year rolling plan period rather than the full 5-year period of the strategy. Separate COBPs were prepared for the Pacific countries for the 2016–2018 period, and these were prepared at the same time as the Pacific Approach, 2016–2020.29 The COBPs for 2016–2018 followed the traditional ADB sector-based reporting, which makes it difficult to assess the intended spending against the three thematic priorities identified in the strategy. It also makes it hard to see how the strategy was operationalized in this regard. The PIC-11 combined proposed lending program for 2016–2018 totaled $245 million. In the indicative program, the transport sector was allocated $87 million (36% of the strategy envelope), followed by energy at $49 million (20%), ICT $45 million (18%), WUS $29 million (12%), PSM $28 million (11%), education $4 million (2%), and industry and trade $3 million (1%) (Figure 1).30 30. The PIC-11 have indicative resources available for commitment to sovereign operations totaling $359.7 million during 2019–2021. The resources available comprise $78.0 million in regular OCR and $281.7 million in concessional resources—$71.6 million in COL and $210.1 million in ADF grants. The proposed lending program for 2019–2021 totaled $656.1 million, which is more than twice the allocation in the combined PIC-11 COBPs for 2016-2018, and comprised $31.1 million in regular OCR lending, $154.5 million in COL, and $470.5 million in ADF grants. The nonlending program totaled $16.5 million and the indicative cofinancing program for 2020–2022 was $796.5 million. A significant proportion of this cofinancing is expected to be provided by the Green Climate Fund to support energy, water, and urban projects. In the COBP 2019–2021 indicative program, the transport sector was to be provided more

29 The first multi-country PIC-11 COBP was prepared for the period 2018–2020. Before that, 11 COBPs were prepared and presented

separately. 30 The data presented for 2016–2018 and 2017–2019 are the combined figures from the individual COBPs of PIC-11 while data for

2018–2020 and 2019–2021 were from the multi-country COBPs prepared for the PIC-11. The multi-country COBP approach only started in 2017 (for COBP 2018–2020) although the CPS Pacific Approach (2016-2020) was prepared in 2015–2016.

Introduction 9

than one-quarter of the resource envelope, with an allocation of $167.6 million (26% of total strategy envelope). WUS was allocated a lot more than previously with more than one-quarter of the total, with an allocation of $169.2 million (26%). PSM was to be allocated more with $112.5 million (17%), Energy was allocated less than before at $108.8 million (17%), ICT $31 million (5%), finance $23 (4%), health $21 million (3%), education $21 million (3%), and industry and trade $2 million (0%).31 31. In addition to the COBP, Pacific Department (PARD) prepares a separate Pacific ROBP annually, which sets out ADB’s regional lending and non-lending activities for the entire Pacific-including the three larger non-PIC-11 countries (Fiji, PNG, and Timor-Leste).32 The ROBP 2019–2021 is consistent with ADB’s Strategy 2030, which commits ADB to prioritizing support for the poorest and most vulnerable countries, including SIDS, and directly supports the operational priority of fostering RCI.33 The ROBP 2019–2021 supports Strategy 2030’s commitment to increase support for regional public goods and collective actions to mitigate cross-border risks pertaining to climate change, environmental pollution, energy and water security, and communicable and infectious diseases. It complements the individual COBPs for Fiji and PNG, and the combined COBP for 11 small Pacific island countries.34 ROBPs present results areas by sector, without quantifiable targets; but, unlike the COBP, it groups the sectors under the three strategic priorities of the Pacific Approach, 2016–2020. The ROBP and the outcome targets are not linked to COBPs or the Pacific Approach, 2016–2020 results framework. Monitoring of results at the country levels does not appear to be part of the system, adding to country and regional performance monitoring difficulties in the preparation of the CPSFR. Analysis of ROBPs over 2016–2020 is provided at Appendix 3.

31 ADB. 2018. Country Operations Business Plan: 11 Small Pacific Island Countries, 2019–2021. Manila. 32 While Fiji, PNG, and Timor-Leste, are not PIC-11 countries and they have their own respective CPSs, performance in these

countries is relevant to this validation because the Pacific Approach, 2016–2020 serves as the operational framework of the ADB for the Pacific region and is the overall CPS for the 11 PIC DMCs. In 2018, ADB moved operations in Timor-Leste from PARD to the Southeast Asia Department (SERD).

33 ADB. 2018. Regional Operations Business Plan: Pacific, 2019–2021. Manila. 34 ADB. 2017. Country Operations Business Plan: Fiji, 2018–2020. Manila; ADB. 2018. Country Operations Business Plan: Papua

New Guinea, 2019–2021. Manila; ADB. 2017. Country Operations Business Plan: Timor-Leste, 2017–2019. Manila; and ADB. 2018. Country Operations Business Plan: 11 Small Pacific Island Countries, 2019–2021. Manila. The latter covers the Cook Islands, FSM, Kiribati, Nauru, Palau, RMI, Samoa, Solomon Islands, Tonga, Tuvalu, and Vanuatu.

10 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

2. Approved ADB Portfolio 32. Active sovereign loans, grants, and TA approved during the Pacific Approach, 2016–2020 totaled $1,089.9 million, with additional cofinancing totaling $994.42 million. Nonsovereign operations totaled $102.0 million (Table 2). Transport was the largest sector supported through the sovereign lending program, at $273.7 million committed (28%); followed by energy at $226.8 million (23%); WUS $155.5 million (16%); ICT $135.2 million (14%); PSM $122.5 million (12%); health $34.5 million (4%); and education $32.0 million (3%) (Appendix 4).35 Without adequate information in the CPSFR, further in-depth research would be required to evaluate whether this composition of the portfolio is aligned with the requests of the 11 governments to focus primarily on transport and energy.36 For example, the PIC-11 have been unequivocally requesting development partner support for transformative action to address the root causes of climate change and secure long-term solutions for future generations, which is not addressed in the current portfolio as the transformative needs go beyond the provision of climate proofed infrastructure. It is also not possible to examine the extent to which the approved ADB portfolio adequately addressed the three strategic priorities of reducing costs, managing risks, and enabling value creation. Changes made through the COBP processes resulted in sectoral expenditure being different from what was originally anticipated under the Pacific Approach, 2016–2020. The proportion allocated to transport and ICT over the period was lower than originally intended, whereas the proportion allocated to WUS, energy, education increased. Operations approved during the strategy period consisted of 51 sovereign loans and grants, 4 TA, and 2 nonsovereign loans and equity investments (Table 3).37

35 See footnote 25. The agriculture, natural resources, and rural development sector comprised $5 million (0.5%) of the active

sovereign loans, grants, and TA during the Pacific Approach, 2016–2020. 36 This additional research was not undertaken because of time constraints. 37 Twelve of the new TA projects commenced in 2016–2020 were for project preparation associated with sovereign projects.

Introduction 11

Table 2: Summary of Country Portfolio: Equities, Loans, Grants and Technical Assistance, 2016–2019

ADB Support

Approved before Country Partnership Strategy but Ongoing

and / or Completed During Strategy Period

Approved During Strategy Period

Total

Number

ADB Approved Amount

($ million)

Cofinanced Approved Amount

($ million) No.

ADB Approved Amount

($ million)

Cofinanced Approved Amount

($ million) No.

ADB Approved Amount

($ million)

Cofinanced Approved Amount

($ million)

Sovereign Loans and Grants

33 373.70 332.46 51 611.50 526.81 84 985.20 859.27

Technical Assistancea

50 35.20 84.83 44 69.52 50.33 94

104.71 135.16

Subtotal 83 408.90 417.29 95 681.01 577.14 178 1,089.91 994.42 Nonsovereign

Equities and Loans

0 0.00 - 2

102.00 - 2

102.00

-

Subtotal 0 0.00 - 2 102.00 - 2 102.00 - Total 83 408.90 417.29 97 783.01 577.14 180 1,191.91 994.42

ADB = Asian Development Bank Note: There are four projects approved before strategy period that are fully financed by development partners (3 Japan Fund for Poverty Reduction and 1 Strategic Climate Fund grant). a Includes stand-alone and piggybacked technical assistance Sources: Independent Evaluation Department Database; Controller’s Department database as of 31 December 2019; ADB eOperations and ADB’s project website, as of 20 March 2020.

Table 3: Asian Development Bank PIC-11 Active Lending Portfolio, 2016–2019

Project Type Number of

Projects

Approved Amount

($ million)

Sovereign approved and ongoing during CPS period 38 550.60

Sovereign approved and closed during CPS period 13 60.90

Sovereign approved before CPS period and ongoing during CPS period 16 220.82

Sovereign approved before CPS period and completed during CPS period 17 152.88

Sovereign total 84 985.20

Nonsovereign approved and ongoing during CPS period 2 102.00

Nonsovereign approved before CPS period but ongoing and/ or completed during CPS period

0 0.00

Nonsovereign total 2 102.00

Total 86 1,087.20 CPS = Country Partnership Strategy Notes: Values exclude the technical assistance portfolio and cofinancing. Data as of 31 December 2019. Source: Independent Evaluation Department estimates using data from Controller’s Department. 33. This validation assesses 86 sovereign and nonsovereign projects in total, including projects approved during the strategy period as well as ongoing and completed projects during Pacific Approach, 2016–2020 (Table 3 and Appendix 5, Tables A5.1 and A5.3). Approximately 34% of the total lending program commenced prior to the Pacific Approach, 2016–2020, reflecting the weight of ongoing projects (Tables 2 and 3). Thirty projects totaling $213.78 million were completed during the strategy period, and of these 14 have completion reports [13 PCRs and 1 implementation completion memorandum (ICM)]. Of the 14 completion reports, 9 have been validated so far (Chapter 2, Table 5). Due to the limited number of PCRs and PVRs relative to the number of total projects and the number of countries covered, these reports on their own do not provide an adequate evidence base on which to rate the PIC-11

12 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

program.38 This validation has therefore used its judgment judiciously in assessing the performance of ongoing projects and completed projects that do not have a PCR or PVR. Ninety-four TA projects totaling $104.71 million and with a leveraged cofinancing amount of $135.16 million were approved, ongoing, or completed during Pacific Approach, 2016–2020; 37 of the 50 TA projects completed have completion reports.39 No nonsovereign investments were approved prior to 2016 and two were approved during the Pacific Approach, 2016–2020. As of 31 December 2019, the ongoing portfolio consisted of 54 sovereign projects totaling $771.42 million, 44 TA projects valued at $165.86 million (including cofinancing amount of $95.46 million),40 and 2 nonsovereign investments totaling $102 million.

38 The Solomon Islands Economic Growth and Fiscal Reform Program received a PCR validation prior to the completion of this

CPSFR validation. It was found to be less than successful, less than relevant, less than effective, less than efficient, and likely sustainable.

39 Independent Evaluation Department established a process to validate these in 2020. 40 Independent Evaluation Department Database; Controllers database as of 31 December 2019; ADB eOps and ADB's project

website, as of 20 March 2020.

CHAPTER 2

Validation of the Country Partnership Strategy Final Review

34. This chapter validates the findings of the CPSFR and provides an overall assessment of the performance of the Pacific Approach, 2016–2020 and ADB’s operations, consistent with the 2015 Guidelines for the Preparation of Country Assistance Program Evaluations and CPSFR Validations (footnote 5). The validation follows the structure of the CPSFR and the Pacific Approach, 2016–2020, focusing on its three strategic priorities, with a separate section on private sector operations, even though these were very limited. The analysis draws on PCRs and PVRs for completed projects, along with interviews with ADB staff, government officials, and other stakeholders in Australia, Fiji, RMI, Tonga, Tuvalu, and Vanuatu.41

Relevance

35. The CPSFR assessed ADB’s program under the Pacific Approach, 2016–2020 relevant. In making this assessment, the CPSFR stated that its three strategic priorities of reducing costs, managing risks, and enabling value creation, were aligned with the national development priorities of the respective PIC-11, ADB’s corporate strategy and objectives, and the priorities of development partners in the region. The CPSFR states that the focus on the three strategic priorities helped address key development constraints in the PIC-11, including isolation from markets and resources, vulnerability to climatic and economic shocks, and limited opportunities for economic growth. It states that the regional approach enabled the PIC-11 to pool knowledge and resources and leverage greater economies of scale to achieve common development goals. It also explains portfolio growth over the period 2016–2020. 36. Alignment with PIC-11 needs and respective government priorities and choices of sectors. The CPSFR does not provide the evidence needed to verify that the Pacific Approach, 2016–2020 is aligned with country needs or government priorities. The validation confirmed that the PIC-11 all had respective national development strategies and/or plans in place at the commencement of the Pacific Approach, 2016–2020. The plans for Kiribati and Samoa have since expired and are yet to be replaced. Analysis of COBPs across the 11 countries indicates that it is likely that government priorities were considered in the choice of sectors and the design of projects. Validation mission interviews with government counterparts in RMI, Tonga, Tuvalu, and Vanuatu confirmed that projects in those countries are aligned with national priorities. 37. Alignment with ADB’s strategic agenda and core operational areas. The portfolio is aligned with four of the five core areas of ADB operations under Strategy 2020 (infrastructure, environment, RCI, finance sector development, and education), as well as with drivers of change (private sector development, governance and capacity development, gender equity and mainstreaming, knowledge solutions, and partnerships) and climate change as a priority area. While ADB’s strategic agenda and core operational areas are not addressed in each country, these are sufficiently addressed when the portfolio

41 While Fiji has its own CPS, which is separately validated, the mission team met with ADB staff and other stakeholders in Fiji to

discuss Pacific regional projects as well as projects in the PIC-11 countries that are managed from Fiji. The mission also met virtually with stakeholders in the Pacific Liaison and Coordination Office in Sydney, Australia (PLCO).

14 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

is considered in its totality. The program is dominated by infrastructure, and it was through these investments that ADB delivered support in transport, energy, and WUS. Partnerships was a positive feature of the program, with ADB aligning closely with key multilateral and bilateral partners to deliver support, and this is evidenced by sizeable cofinancing in the PIC-11.42 38. Incorporating recommendations from the last Independent Evaluation Department (IED) evaluation and Fragility Assessment. The Pacific Approach considered the 2015 IED Corporate Evaluation of Asian Development Bank Support to Pacific Small Island Countries.43 The previous strategy and interim strategy had been written to achieve a development goal that was aligned with regional and national strategies and priorities.44 The evaluation recommended that the next strategy consider: (i) a sharper focus on ADB engagement in SIDS and FCAS; (ii) increased human resources for PARD for better continuity and to improve monitoring and supervision of projects; (iii) broader and scaled-up support for climate change adaptation; (iv) improved project preparation and readiness through increased use of the project design facility; and (v) strengthened approach for capacity building in PSM operations, and increased resources for TA.45 The 2016–2020 strategy accepted these recommendations and also stated that it took into account ADB’s differentiated approach to FCAS countries and the need to tailor support to the individual country’s fragility characteristics and national priorities.46 Supporting this, it was assessed that regardless of whether a country is classified as an FCAS country, all of the PIC-11 share a common vulnerability. In practice, the Pacific Approach, 2016–2020 was quite different to the previous strategy, insofar as the 2016–2020 strategy no longer addressed a stated development goal; it was not obviously aligned with regional or national strategies or priorities; and while it identified the need for a differentiated approach, compared with the previous strategy it became a generic thematic strategy that covered 11 small, fragile, and unique countries without clear articulation of their different development contexts, needs, or priorities. The differentiated approach was only elaborated in terms of business processes. 39. Appropriateness of selected modalities. Drawing on the experiences of the previous strategy period, project loans and grants remained the dominant modalities by volume and number for the Pacific Approach, 2016–2020 to support small, medium, and large national level investments (Figure 2).47 Projects provided certainty with the predictable financing and encouraged investment procurement and advance project preparation. Projects created an environment conducive to short- to medium-term capacity building and staff training, which was primarily limited to the executing and implementing agencies for ADB projects. While policy-based loans (PBLs) have increased in volume of finance, due to the overall increase in financing available for the Pacific, they continue to comprise approximately 20% of modalities used, consistent with use of the policy-based lending modality under the previous ADB’ Pacific Approach, 2010–2014. Projects and PBLs attracted significant cofinancing resources, which also improved development partner coordination. The joined-up approach has reduced the administrative burden on the small executing and implementing agencies and has increased their absorptive capacity. Most of the PBLs were for economic and financial policy reforms and not for sector-specific reforms.

42 Development partners with which ADB frequently engages include Australia, New Zealand, Japan, European Union (EU), and the

World Bank. See Appendix 5, Table A5.2, for a comprehensive list. 43 ADB. 2009. ADB’s Pacific Approach, 2010–2014. Manila; ADB. 2015. Interim Pacific Approach, 2015. Manila. 44 The Pacific Approach, 2010–2014 and Interim Pacific Approach, 2015 goal was: sustained and resilient, improved standards of

living. 45 IED. 2015. Corporate Evaluation: ADB Support to Pacific Small Island Countries. Manila: ADB 46 ADB. 2007. Achieving Development Effectiveness in Weakly Performing Countries: The Asia Development Bank’s Approach to

Engaging with Weakly Performing Countries. Manila; and ADB. 2013. Operational Plan for Enhancing ADB’s Effectiveness in Fragile and Conflict-Affected Situations. Manila.

47 Data used in the CPSFR included indicative figures for 2019 and 2020, whereas the information in Figure 1 is derived from the ADB Operation Dashboard, on 28 Feb 2020.

Validation of the Country Partnership Strategy Final Review 15

40. The validation found the choice of modalities appropriate. The CPSFR did not discuss the appropriateness of the modalities selected, but noted that there had been a significant increase in the share of sector operations through PBLs and multitranche financing facilities (MFFs). It reported that the two modalities helped to deliver long-term, flexible, and programmatic financing to improve infrastructure and ensure capacity to manage and maintain it. One MFF was used to support higher education projects across the campuses of the University of the South Pacific (USP) in Kiribati and the Solomon Islands separately, and as such it is expected that benefits from continuity are unlikely to have accrued to the countries.48 Sector support under the strategy focused on building the capacity of institutions to plan and implement pipelines of projects, including in operations and maintenance (O&M), while improving the commercial performance of utilities and SOEs through appropriate reforms. Sector support has also increasingly engaged local contractors and built capacity to increase the availability of domestic skilled labor and capable institutions. The project readiness facility (PRF) has been used to improve project design and implementation readiness. In 2019, PARD processed five PRFs focusing on the transport, and WUS sectors, amounting to about $47 million. All of this supports the appropriateness of the modalities used. 41. The 2020 Annual Evaluation Review (AER)49 drew on the 2018 policy-based lending evaluation,50 and confirmed the importance of PBLs to Pacific island economies in principle, as they are highly vulnerable to external shocks. However, the report noted that the use of PBLs is increasingly concentrated on PSM and PFM, and differed in its assessment from that of the CPSFR, in that not much policy-based lending supports infrastructure sector reforms directly and persistently. While ADB tends to address specific sector reforms through other lending and nonlending instruments, such as TA, this may not be enough to remove binding constraints on growth in a systematic way. Furthermore, in the Pacific, ADB has had limited options to assist DMCs when an emergency hits. Group A countries have not been eligible for counter-cyclical crisis responses until very recently.51 A new contingent disaster financing option was approved under the policy-based lending policy in mid-2019. This has already been used for two operations focused on disaster resilience and preparedness.

48 IED. 2019. Validation Report: Regional Higher Education in the Pacific Investment Program - Tranche 1 in Kiribati. Manila: ADB. 49 ADB. 2020. 2020 Annual Evaluation Review. Manila. 50 IED. 2018. Corporate Evaluation: Policy-Based Lending 2008–2017: Performance, Results, and Issues of Design. Manila: ADB. 51 While Group A countries are not eligible to access counter-cyclical funds, they may access the COVID-19 Pandemic Response

Option (CPRO) under the counter-cyclical fund.

Figure 2: Commitments by Modality Based on Financial Volume, 2010–2019

MFF = multitranche financing faclity, PRF = project readiness facility, RBL = results-based lending, SDP = sector development program Sources: Independent Evaluation Department estimates using data from Controller’s Department, as of 31 December 2019; ADB Operation Dashboard (accessed on 28 Feb 2020).

16 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

42. The validation mission’s discussions with government counterparts in multiple countries and sector staff involved in processing and implementing investment projects and PBLs confirmed that the two modalities are appropriate for the PIC-11 and that the choice of the investment project modality in particular contributed to improved implementation and capacity development. Development partners confirmed that ADB’s approach to support transport, energy, and WUS sectors through projects gave them confidence to cofinance with ADB and to provide complementary investments in the same sectors, where they otherwise might not have done so. The project modality provided a framework to attract cofinancing resources to the sectors of operation, which totaled $994 million, and comprised $859 million across 45 separate loans and grants (ongoing and completed) and $135 million in TA during the Pacific Approach, 2016–2020.52 In total, cofinancing resources comprised a significant 84% of ADB’s financing. More complementary financing was provided by development partners through separate and additional investments not considered in this report. 43. Alignment, cofinancing, and coordination with development partner programs. The strategy aimed to strengthen partnerships with other development partners and leverage cofinancing opportunities. The strategic priorities reflected consultations with development partners, civil society organizations, and the private sector. ADB regularly participates in development partner meetings in the countries visited by the validation mission (Fiji, Tonga, Tuvalu, and Vanuatu). ADB coordinated closely and cofinanced projects with Australia, through its Department of Foreign Affairs and Trade, the largest bilateral partner in the region. ADB also cooperated with the governments of New Zealand, Japan, and the European Union (EU), as well as the World Bank. These partnerships were built in a range of sectors and support was delivered through a range of modalities. The benefits of cofinancing were particularly evident in relation to the policy-based grants provided in partnership with Australia, New Zealand, the EU, and World Bank – through the Joint Policy Matrixes. Discussion with counterparts and development partners confirmed that improved coordination and increased cofinancing had expanded the absorptive capacity of the small, fragile, PIC-11. For example, the government of Tuvalu informed that increased ADB coordination with Australia, New Zealand, the EU, and World Bank reduced the burden on the government to engage with multiple development partners separately, enabling time to deliver and implement investments as intended. 44. The government and development partners confirmed that ADB’s use of the project and policy-based lending modalities contributed to ADB’s success in attracting cofinancing to operations. For example, the Australian Government informed the validation in mission countries that projects that built on previous work conducted in sectors signaled ADB’s long-term commitment to support transport, energy, and WUS, and provided a framework within which cofinanciers could effectively engage on a long-term basis. ADB continued to attract support in a number of sectors using different modalities. For example, the Government of Australia has continued to cofinance the Tonga Nuku’alofa Urban Development Sector Program.53 However, ADB is yet to harmonize development efforts with PRC, which is a significant development partner for many Pacific countries. Government counterparts were of the view that the contract packages through the projects worked well in the respective countries, and expressed a preference for more subcontracting to go to domestic companies where possible. 45. Addressing cross-cutting issues and drivers of change. The strategy aimed to mainstream four of ADB’s five drivers of change into its operations and activities, including good governance and capacity development, gender equity, knowledge solutions, and partnerships. Private sector development and operations were primarily addressed through a long-term TA program, the PSDI. ADB has also assisted through selected PBL and/or grant operations, supporting business law and SOE reforms and competition policies. ADB support for gender equity, good governance and capacity development, and partnerships received attention during strategy implementation. This was highly appropriate, given that governance, capacity, and gender inequality remain major social, political, and economic challenges for the PIC-11.

52 Sources: Controller’s Department database as of December 2019; ADB eOps; and ADB’s project website, as of 31 January 2020. 53 ADB. 2011. Proposed Grant and Administration of Grant Kingdom of Tonga: Nuku’alofa Urban Development Sector Project.

Manila.

Validation of the Country Partnership Strategy Final Review 17

For example, ADB-supported health projects mainstreamed gender to improve women’s access to health services and prevent and respond to gender-based violence, and strengthen country capacity for gender-sensitive planning and project development. This was an important approach, which could have been expanded to other sectors noting that the Melanesian subregion’s economic and human development is severely impacted by the fact that the subregion has some of the highest rates of family and sexual violence in the world and women are often underrepresented in decision making. The CPSFR states that ADB has mainstreamed gender into project designs, supported policy dialogue on gender equality, and built capacities of governments to develop, deliver and monitor gender equality results. A review of PCRs and PVRs concluded that gender action plans (GAPs) were included in many projects, though none of the projects included a project component or subcomponent targeted specifically at improving gender, which would have been better in the complex gender context.54 The decision to not include projects with a specific project component or subcomponent that addresses gender indicates that more work is required in this space. 46. Pacific Approach, 2016–2020 results framework. As applies to many other CPSFRs validated, IED did not find the results framework a particularly useful tool for measuring the achievements of ADB’s program (Appendix 6). The framework is incomplete, stating in several areas that details are yet to be confirmed; and there is no updated Pacific Approach, 2016–2020 results framework in a COBP or elsewhere. While the Pacific Approach, 2016–2020 does not provide a strategic goal or objectives, the framework presents the three strategic priorities as strategic objectives. It also presents a fourth strategic priority that is not mentioned in the body of the CPS: ‘efficient ADB operational and organizational management’. The fourth objective pertains to ADB’s capacity and effectiveness in delivering operations. Key performance indicators of this nature offer a valuable way to track ADB’s internal performance in delivering a strategy, but are not commonly found in an ADB strategy per se. The inclusion of this objective indicates that aspects of the Pacific Approach, 2016–2020 may have been confused by the blending of an external and internal strategy.55 While the Pacific Approach, 2016–2020 stated that it serves as a CPS for the 11 Pacific island countries, it was not possible to use the results framework to verify that ADB support contributes to national strategies and plans in the respective countries.56 However, the indicators associated with the fourth objective in the results framework were a useful tool in assessing the extent to which ADB has improved its internal capacity to support the PIC-11.57 Pacific Approach, 2016–2020 linked its intended results to the achievement of three SDG goal impact indicators.58 The CPSFR does not report performance against these either. 47. The CPSFR did not refer to the results framework, which made it difficult for IED to assess the program’s performance at the strategic level. There was also very limited evidence presented on individual operations in the CPSFR. The lack of measurement and monitoring of performance against the results framework may in part be attributable to the way ADB presented plans to operationalize its strategy through the COBP process. This is because COBPs report how ADB intends to operationalize the strategy according to sectors of engagement rather than according to the three thematic strategic priorities. Additionally, although the results framework is a key part of the strategic architecture, the COBP process

54 ADB’s gender policy focuses on five dimensions: human development, economic empowerment, voice and decision making,

reduced time poverty, and reduced vulnerability to risks and shocks. 55 Ideally, aspects of Pacific Approach, 2016–2020 that could be considered an internal strategy should have been confined to the

section on implementation. The purpose of a CPS is to document a strategy of how ADB’s assistance will effectively contribute to the achievement of the country’s development and poverty reduction goals as well as country-specific Sustainable Development Goals. (Source: ADB. 2007. Country Partnership Strategy Guidelines. Manila.).

56 Instead, the framework describes ADB’s contribution against three Sustainable Development Goals. 57 ADB efficiency is discussed in the section on effectiveness in this report. 58 The three SDGs are (i) increase substantially the share of renewable energy in the global energy mix (SDG 7.2) - indicator: by

2020, share of renewable energy in the total energy mix substantially increased; (ii) strengthen resilience and adaptive capacity to climate-related hazards and natural disasters in all countries (SDG 13.1) - indicator: by 2020, losses from natural disasters by climate- and non-climate-related events reduced (dollars and lives lost); and (iii) promote development-oriented policies that support productive activities, decent job creation, entrepreneurship, creativity, and innovation, and encourage the formation and growth of small and medium-sized enterprises, including through access to financial services (SDG 8.3) - indicator: by 2020, the proportion of youth not in employment, education, or training substantially reduced.

18 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

does not require performance reporting against the CPS results framework.59 ADB might continue to struggle to articulate or provide evidence of success in the Pacific, if it continues to use a thematic approach in the next CPS, while continuing to present plans to operationalize the strategy using sector based COBPs, particularly without requiring an annual monitoring report on performance against the results framework. 48. Relevance of the three strategic priorities and projects. The CPSFR should have provided evidence to demonstrate the relevance and appropriateness of the three cross-sectoral priorities at the project, sector, and national and regional levels. In the absence of this information, the validation analyzed the relevance of individual operations that were completed over the period, as reported through the nine PVRs and 14 PCRs, as well as the expected relevance of new and recently completed projects. The following projects were confirmed as both successful and relevant through a PVR: the Nauru Fiscal Sustainability Reform Program,60 Solomon Islands Economic Growth and Fiscal Reform Program,61 Kiribati Road Rehabilitation Project with additional financing,62 and Kiribati Regional Higher Education in the Pacific Investment Program – Tranche 1.63 Appendix 7 provides a detailed assessment of the operations as classified in terms of the three strategic priorities against the relevance criterion, along with similar assessments in terms of their effectiveness, efficiency, sustainability, and development impacts. In summary, the validation finds the ADB-supported projects relevant against the strategic priorities of reducing costs and managing risks, and less than relevant in terms of enabling value creation. Support included under the enabling value creation priority would have been more relevant if projects were to have focused more on private sector growth and operations as well as promoting financial inclusion. The enabling value creation priority was not clearly thought through nor clearly targeted. Although projects are categorized against one strategic priority, in reality many may fit into two or three concurrently. 49. Regional Approach. The regional approach was to enable the PIC-11 to pool knowledge and resources, and to leverage economies of scale to achieve common development goals. However, the CPSFR cited no evidence or examples, making validation problematic. Regional TAs have increased in numbers since the previous strategy period, but decreased in total financial value (Figure 3). Additional research undertaken by the validation found evidence that the ROBP is consistent with Strategy 2030, the Regional Cooperation and Integration (RCI) Operational Plan 2019-2024, and with strategic priorities of the Pacific Approach, 2016–2020. The ROBP also appears to be consistent with the Pacific Islands Forum Secretariat’s Framework for Pacific Regionalism.64

59 Strategic architecture is the way an organization comes together from the ground up. This includes such pieces of information

as the stakeholders, the mission, and the vision of the organization. Other important aspects include the plans for operation, the core strategies, and the implementation plans needed to accomplish them.

60 IED. 2018. Project Validation Report: Nauru Fiscal Sustainability Reform Program. Manila. 61 IED. 2019. Project Validation Report: Solomon Islands: Economic Growth and Fiscal Reform Program. Manila. 62 IED. 2019. Project Validation Report: Kiribati Road Rehabilitation Project. Manila. 63 IED. 2019. Project Validation Report: Kiribati/regional Higher Education in the Pacific Investment Program - Tranche 1. Manila. 64 Pacific Islands Forum Secretariat. 2014. Framework for Pacific Regionalism. Suva.

2010-2015

$133.79 million

50 RETAs

2016–2020

$105.98 million

73 RETAs

Figure 3: Regional Technical Assistance, 2010–2015 and 2016–2020

RETA = regional technical assistance; TA = technical assistance.Source: Independent Evaluation Department estimates using data from Controller’s Department.

Validation of the Country Partnership Strategy Final Review 19

50. Regional Cooperation and Integration . Collaboration at regional and subregional levels mitigates the constraints of lack of economies of scale and extreme remoteness of the PIC-11. Despite this, the CPSFR does not provide examples to illustrate how RCI projects have mitigated the constraints. Over the Pacific Approach, 2016–2020 period, RCI projects increased from 10 to 16, and increased in value from $310 million to $438 million (Figure 4). The proportion of RCI investments to the total portfolio has also varied between 23% and 45% during the period (Table 4). The CPSFR could have benefited from discussion on this.

Table 4: Proportion of Sovereign Operations Supporting Regional Cooperation and Integration during 2016–2019

Year

Regional Cooperation and Integration Investments

11 smaller Pacific Island Countries (PIC-11) Portfolio

Proportion of Regional Cooperation and Integration Investments to

Total Portfolio (%)

No. Amount

No. Amount

No. Amount ($ million) ($ million) 2016 3 23.14 13 100.44 23 23 2017 5 53.00 11 72.90 45 73 2018 5 48.80 14 153.92 36 32 2019 5 108.76 18 284.24 28 38

2016-2019 18 233.70 56 611.50 32 38 Note: Total Portfolio includes sovereign loans and grants only. Of the 56 sovereign operations, 51 are new sovereign projects, four are additional financing for projects that commenced prior to the CPS, and one is project design advance, which was later subsumed by the ensuing loan. Source: Independent Evaluation Department estimates; ADB operations dashboard, accessed on 28 February 2020.

51. CPSFR validation overall relevance rating. The validation assesses ADB’s program under the Pacific Approach, 2016–2020 relevant. However, strategy must precede the implementation approach in the strategic hierarchy. The Pacific Approach, 2016–2020 inadvertently blurred the line between being a strategy and an implementation plan. While the CPSFR did not provide evidence to justify its rating, the validation found information indicating that, in practice, there appears to be (i) some strategic alignment with regional and national development needs and challenges; (ii) good alignment with ADB’s strategic agenda and core operational areas; (iii) an appropriate selection of modalities; (iv) good alignment, cofinancing, and coordination with other development partners’ programs; (v) some success in addressing cross-cutting issues and drivers of change; and (vi) the alignment of all investments with one or more of the three strategic priorities. 52. ADB’s inability to collect evidence, measure progress, monitor change, and articulate performance at the strategic level in the CPSFR indicates a flaw in the design and implementation of the strategic architecture. As evidence of this, the Pacific Approach, 2016–2020 did not address a goal for the region or 11 countries, or provide strategic objectives; however, it did state that its three-pronged

2010-2015$310 million10 Projects2016-2019

$438 million16 Projects

Figure 4: Pacific Department Projects Tagged as Regional Cooperation and Integration for Strategy 2020

Source: Independent Evaluation Department estimates using data from Controller’s Department.

20 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

strategy addressed challenges for achieving more inclusive economic growth, job creation, and improved human development outcomes. While the strategy recognized country needs as set out in the constraints analysis, it did not emphasize or demonstrate links to regional or country strategies or priorities. Relevance was also difficult to demonstrate because the Pacific Approach, 2016–2020 results framework was not used for measuring or reporting the achievements of ADB’s portfolio. Despite this, indicators relating to objective four in the results framework (which is not described as an objective in the Pacific Approach itself) were used to demonstrate improved ADB efficiency in providing support. This mismatch supports the view that the Pacific Approach, 2016–2020 represented more of an operational framework or implementation plan for ADB operations than a strategy to support development in the region or the 11 DMCs. The CPSFR’s ability to demonstrate relevance at the strategic level may also have been impeded by the strategy employing a thematic approach instead of a sector-based approach. Had a sector-based approach been used, ADB may have found it more possible to establish and implement simple systems and processes to measure, monitor, and report performance at the strategic and investment levels.

Effectiveness 53. The CPSFR assessed the portfolio’s overall progress toward achieving outcomes during the Pacific Approach, 2016–2020 period effective on the basis that projects and TA helped to achieve national development objectives and the majority of projects have produced their intended outcomes and outputs or, for those underway, are likely to achieve outcomes. The CPSFR presents individual project results according to the three strategic priorities including contributions to regional development outcomes, citing individual ratings of projects with completion reports. Unfortunately, the number of completed projects is relatively small and their effectiveness ratings cannot be the only basis for rating the performance of the program, completed, mature, and ongoing during 2016–2020. Also, the CPSFR did not present an evidence-based approach to assessing the likely effectiveness of mature projects in the portfolio. To establish a more comprehensive evidence base, this validation assesses effectiveness based on (i) the achievement of results framework indicators for completed projects and on the likely outcomes of ongoing projects, especially mature ones; and (ii) the trend in portfolio implementation performance according to project-level performance and the expected outputs and outcomes of the ongoing and mature portfolio.

1. Achievement of Pacific Approach, 2016–2020 Results Framework Outcomes 54. The Pacific Approach, 2016–2020 results framework was not used to monitor or measure the portfolio’s achievements and the CPSFR did not include an assessment of achievements. Appendix 6 summarizes the CPS targets envisaged in the results framework and the validation’s assessment of how progress against the targets could have been measured and monitored. Based on the scale of support provided to the Pacific, and despite intentions, it was unrealistic to expect that ADB support could influence change at the national and regional level through the strategic priorities, indicators, and targets included in the CPS results framework. 55. ADB’s ability to monitor and articulate performance using the Pacific Approach, 2016–2020 results framework was compromised from the outset because of a mismatch in ADB reporting requirements against the strategic architecture, among other things. As evidence of this, at the country level, COBPs only state outcome objectives and do not include any performance targets linking the country program to the Pacific Approach, 2016–2020 results framework; thus, the achievement of performance targets at the portfolio level is neither monitored by the ADB Pacific Country Office (PCO) nor reported in aggregate form. Some projects are overseen by PCO staff, but most are overseen by project officers in ADB headquarters, the Pacific Liaison and Coordination Office, and the Pacific Subregional Office, where performance monitoring is not linked to the Pacific Approach, 2016–2020 results framework until preparation of the PCR. Annual reporting at the country and sector levels links projects to the three strategic objectives of cost reduction, management of risks, and enabling value creation; but this is done only in the context of alignment, not performance assessment against

Validation of the Country Partnership Strategy Final Review 21

indicators. No system has been established to pull these together, which is likely to have contributed to the CPSFR’s inability to assess and report achievements according to the results framework. However, several performance indicators (e.g., electricity from renewable sources, public expenditure performance, urban population with water, and ADB operational effectiveness) could have been examined using regional data and in the case of ADB operations, regular portfolio reporting could have been used, noting that the targets were quite specific. While the CPSFR did not measure achievements against the results framework, Appendixes 6 and 7 offer a summary of how evidence could have been used to demonstrate performance against targets in the CPSFR and attribute elements of change in the Pacific to the support provided by ADB.65

2. Trend in Portfolio Implementation based on Project-level Performance 56. A total of 30 projects were completed and 14 had PCRs prepared during Pacific Approach, 2016–2020 (Appendix 8).66 Of these 14 projects, one was assessed less than effective and one was ineffective. The corresponding data for the nine validated projects was four out of nine validated projects being less than effective or ineffective, representing an effectiveness rate of 56%. The two projects that were downgraded to less than effective were the Samoa SchoolNet and Community Access Project67 and the Solomon Islands Transport Sector Development Project.68 Nine PVRs for a portfolio of 84 projects (see Tables 2 and 3), 30 of which were completed over the period, do not constitute a large enough sample to be used as the main basis for an effectiveness rating. Analysis of the ongoing and mature portfolio and the past portfolio does not indicate a positive performance trajectory, as evidenced through the 2020 AER (see para. 59). 57. Effectiveness of the operations categorized in terms of the three strategic priorities. The CPSFR discussed the effectiveness of projects by grouping them according to their contribution to the three strategic objectives. The validation assesses as effective the projects categorized against the strategic priority of managing risks; and as less than effective the projects categorized against the priorities of enabling value creation and reducing costs. Overall, around half of the completed, mature, and nearly completed projects may be performing effectively, which is below the ADB average. Appendix 7 provides a detailed assessment of project performance on completed, mature, and ongoing projects against the three strategic priorities. 58. Mature and ongoing projects indicating signs of positive performance include renewable energy projects that are targeting the use of solar or wind power to replace diesel generation and are expected to reduce carbon emissions and the cost of imports for diesel fuel; ICT projects and undersea cable projects; disaster resilience programs that support policy actions in DRM and provide contingent financing for timely disaster response, early recovery, and reconstruction activities; and the water and sanitation project in Ebeye, which is already increasing the supply of water. The maritime projects appear to be less than effective, for example wharf construction delays in the Vanuatu maritime project are impeding effectiveness. Delays to a regional health program delivering vaccines to Samoa, Tonga, Tuvalu, and Vanuatu have also impacted the intended benefits of the program. The business environment in the Pacific remains problematic and the strategy for increasing private sector development as a key component of the enabling value creation strategic priority has been less than effective. Supporting this, an IED evaluation of the PSDI, 2007–2017, found that delivered outputs did not fully achieve the intended outcomes. 69

65 This validation is not well placed to recreate the results framework or establish a theory of change to articulate what actually

happened. 66 A summary of PCR and PVR ratings according to strategic priority is provided at Appendix 7. Two reform programs included

under enabling value creation could have been included under managing risks and as such are represented against both strategic priorities.

67 IED. 2019. Validation Report: SchoolNet and Community Access Project in Samoa. Manila: ADB. 68 IED. 2018. Validation Report: Transport Sector Development Project in Solomon Islands. Manila: ADB. 69 IED. 2018. Pacific Private Sector Development Initiative. Manila: ADB.

22 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

59. 2020 Annual Evaluation Review. The analysis of completed, mature, and ongoing projects does not indicate a positive performance trajectory for ongoing projects in the Pacific. The 2020 AER found that project performance in ADB’s Pacific region as a whole deteriorated from 59% for projects validated in 2016–2018 to 42% for projects validated in 2017–2019,70 because of particularly weak performance in PNG and Samoa. While the performance in most regions declined, performance in the Pacific declined the most, by 17 percentage points to 42%. The fluctuations in performance are in part attributed to the small number of projects in the Pacific. Also, these ratings pertain to projects that were largely completed prior to the commencement of the Pacific Approach 2016–2020. Performance across the region was pulled down by the weak performance of the infrastructure program, particularly the transport (14% successful) and WUS programs (25% successful). In Samoa, one out of two projects (50%) was assessed successful in 2016–2018, which declined to one out of three (33%) in 2017–2019. The performance of regional investments was similarly challenging for the Pacific, which recorded the lowest level of successful and highly successful projects (50%) in ADB. 60. CPSFR validation overall effectiveness rating. The validation assesses the ADB-supported program under the Pacific Approach, 2016–2020 less than effective. Performance remained low in the Pacific, partly because of the complexities and challenges that are inherent in fragile countries, where weak government capacity and inadequate government support to implementing agencies impede effectiveness. The CPSFR did not provide evidence to verify the effectiveness of the ADB-supported program. Consequently, the validation has cited positive examples of effectiveness and has used its judgment judiciously in assessing the performance of ongoing projects and completed projects that do not have a PCR or PVR (Appendix 7). When examining performance over 2016–2020 and a longer period, evidence suggests an underlying pattern of underperformance of operations in the PIC-11, which remains difficult to explain, given the various improvements ADB has made to factors within its control over several decades.

Efficiency 61. The CPSFR rated ADB operations and the portfolio performance as a whole efficient. The portfolio is dominated by infrastructure projects and PBLs. Analysis of the portfolio indicates that the PIC-11 have a higher number of projects at risk compared with the ADB average; but they perform better on contract awards and disbursements, and on start-up compliance (loan and grant signing to effectivity) (Appendixes 7, 8, and 9). Implementation delays, including delays in procurement and slow civil works construction, affected projects. The Pacific Approach, 2016–2020 attempted to address the risks associated with the quality and timeliness of project implementation—particularly slow procurement and weak project management—and risk mitigation measures were undertaken throughout the period. Budget constraints and debt distress in some of the PIC-11 (e.g., Tonga) are likely to constrain expenditure for the foreseeable future. It is also to be expected that COVID-19 will adversely impact the availability of counterpart funding (something that the Pacific Approach, 2016–2020 and CPSFR could not have foreseen). The CPSFR posits that investment costs were appropriate for producing the intended benefits, and that, in most cases, they represented the least-cost options for delivering planned outcomes. Evidence was not presented to support this claim and efficiency was not discussed separately across the three strategic objectives. Many completed projects are in fact rated less than efficient and ongoing projects continue to face delays, some of which are very substantial e.g., the Solomon Islands Domestic Maritime Support (Sector) Project and the Vanuatu inter-island shipping project, where the work has been suspended for two years.71 62. Economic rates of return have been calculated for some completed projects in the energy sector, which are positive, but many projects are ongoing without such calculations yet being feasible, and thus information is insufficient to determine an overall assessment on such returns.

70 IED. 2020. 2020 Annual Evaluation Review. Manila: ADB. 71 ADB. 2015. Report and Recommendation of the President to the Board of Directors: Proposed Loan and Administration of Grant

to the Republic of Vanuatu for the Interisland Shipping Support Project. Manila.

Validation of the Country Partnership Strategy Final Review 23

63. Overall portfolio performance. ADB assesses project portfolio performance using the following performance indicators: (i) contract awards, (ii) disbursements, (iii) technical conditions, (iv) financial management, (v) safeguards, (vi) gender, and (vii) compliance with loan covenants. As of 31 December 2019, ADB’s active sovereign portfolio in the PIC-11 was $1,256.3 million (including cofinancing), comprising 26 public sector loans ($274.5 million) and 96 grants ($815.9 million) to finance 56 projects, and 44 TA projects ($165.9 million).72 The transport sector comprised 28.5% of the PIC-11 sovereign lending portfolio with operations (excluding cofinancing) amounting to $220.0 million. Ranked second was the energy sector with $157.3 million (20.4%), followed by the WUS sector with $155.5 million (20.2%), the ICT sector with $101.6 million (13.2%), and the PSM sector with $70.5 million (9.1%). Other sectors with sovereign lending operations are health ($33.1 million), education ($28.4 million), and ANR ($5 million). The PIC-11 portfolio continues to experience implementation challenges relating to (i) procurement issues, including lengthy bid preparation, bid evaluation, and preparation of bid reports requiring quality improvements and prolonged government approval processes; (ii) the weak financial management capacity of executing and implementing agencies; and (iii) the need for proper contract management and stringent construction supervision to ensure full adherence to commercial and contractual commitments and performance. 64. The trend of the overall portfolio ratings for the last 6 years (2014–2019) is shown in Appendix 10. The percentage of projects at implementation risk in the PIC-11 from 2014 to 2018 was higher than the ADB-wide average, and for PARD as a whole.73 By September 2019, FSM, RMI, Solomon Islands, Tonga, and Vanuatu had projects at risk; but performance had improved with only 14% of projects being at risk, below the ADB average of 35%. This was the one time that the PIC-11 portfolio performed better than the rest of ADB. 65. Process efficiency. The PIC-11 performed much worse than the ADB-wide average on contract awards and disbursements from 2016 to 2018, and then better than the ADB-wide average in 2019, as shown in Appendix 11. Performance varies from country to country and year to year because the portfolios are small, and this is assessed to reflect the lumpiness of project interventions rather than variations in performance.74 The contract award ratio for the PIC-11 was higher than the ADB-wide ratio in 2016 and 2018, but lower in 2017 and 2019. The disbursement ratio for the PIC-11 is higher than the ADB-wide ratio. 66. Contract awards. ADB has introduced greater flexibility in procurement and contract requirements, including several innovations in its procurement policy to compensate for the high cost environment, small markets, and limited skill pools in the PIC-11.75 ADB’s Procurement, Portfolio and Financial Management Department has embedded three procurement specialists in PARD to provide in-house procurement support, providing direct access to procurement advice and capacity building. Apart from increased capacity, this has led to greater awareness of the procurement flexibilities that can be applied in the Pacific, in recognition of the unique challenges in small economies. Data on startup

72 The total active sovereign lending portfolio (excluding cofinancing) amounts to $777.4 million. It is comprised of 26 public sector

loans ($274.5 million) and 61 grants ($496.9 million) financing 54 projects (the other 2 projects are solely funded by cofinancing partners). The total active TA portfolio (44 TA projects, $165.9 million) consists of 41 TA projects financed by ADB ($70.4 million), of which 11 are cofinanced ($83.96 million), and 3 TA projects ($11.5 million) solely funded by cofinancing partners. Note that only fully ADB-administered cofinancing was considered in describing the active portfolio in this section.

73 The CPSFR states that the performance of projects in the Pacific has improved consistently over the period 2016–2020, with the performance rating of PARD projects improving from 57% of projects rated on-track in 2017 to 73% on-track in 2018 (compared to the ADB average of 75% on-track in 2018). This information is not supported by available data for IED validation.

74 Setting aside funds, on an as-needed basis, for capital projects that will occur in future years is expressed by "lumps" on a bar graph or financial cash flow table.

75 ADB procurement and contract changes include (i) an increase in the threshold for the simplified procurement method, shopping, under the 2015 Procurement Guidelines from $100,000 to $300,000; (ii) joint selection of consultants, which allows ADB to directly support the selection process up to the end of the evaluation stage while the executing agency maintains control over contract negotiations, signature, and subsequent management; (iii) engagement of independent review consultants to assist in the review of technical outputs delivered by the main design consultant, at selected stages in the project cycle as a risk mitigation tool; (iv) increased use of direct contracting and single source selection, force account and community participation; and (v) engagement of procurement consultants under retainer contracts.

24 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

performance, covering average time from approval to signing and signing to effectivity of loans, grants, and TA projects indicate that the PIC-11 performed better than the ADB-wide average, as shown in Appendix 12. Kiribati, FSM, and Solomon Islands performed less well than the other PIC-11 countries, with FSM facing notable challenges between loan and grant signing and effectivity. These show process efficiency on startup, but not implementation efficiency. 67. Processing and implementation efficiency. Despite challenges with specific projects, overall processing and implementation efficiency increased over the strategy period. ADB instituted a number of important measures to improve project processing, preparation, and implementation, which supported more efficient assistance to the Pacific. These included: (i) increasing the number of staff in PARD and ADB’s field presence in the PIC-11, and realigning management to support department growth; (ii) facilitating project processing and implementation with hands-on technical support and increased flexibility in procurement and contracting requirements; and (iii) leveraging innovative financing tools to deliver flexible, programmatic financing, and faster project approvals. 68. Staffing and management. The Pacific Approach, 2016–2020 highlighted the need to increase PARD’s staff resources to manage the higher levels of assistance and growing portfolio. PARD has expanded its staff and modified its organizational structure, increasing the number of budgeted staff positions by 46% (from 113 positions to 165); segmenting its operations into four sector divisions (energy; transport and communications; social sectors and public sector management; and urban development, water supply, and sanitation); and establishing the Portfolio, Results, and Quality Control Unit under the Office of the Director General. The restructuring and increased number of staff have enabled PARD to be more efficient in processing and implementing a larger volume of projects and to be more responsive to country-specific conditions. ADB also approved the establishment of Pacific Country Offices in each of the PIC-11 countries that did not already have a resident mission, and in doing so, significantly improved counterpart and stakeholder perceptions relating to ADB commitment and presence on the ground.76 ADB’s increased representation in the Pacific is likely to improve ADB’s ability to support Pacific countries as they grapple with COVID-19. 69. ADB staffing profile. Only eight out of 1,287 ADB international staff are from a Pacific DMC, representing 0.62% of all international staff.77 ADB international staff from the Pacific come from the Cook Islands, FSM, Fiji, Samoa, and Tonga; and none come from Kiribati, Nauru, Palau, PNG, RMI, Solomon Islands, Tuvalu, Vanuatu, or Niue (the newest member).78 No member of management comes from a Pacific DMC. At the national staff and administrative staff levels, 51 out of 2,261 staff in total (2.43%) come from a Pacific DMC. When management, international, national, and administrative staff numbers are combined, staff from the Pacific DMCs comprise 1.66% of all staff, which is not proportionate when considering that the Pacific DMCs comprise 14 of the 46 DMCs (30%). While this may be considered to be a reasonable representation of Pacific DMCs based on financial membership, it indicates that ADB may not be engaging staff with the greatest tacit knowledge of the Pacific. Hiring more staff with such knowledge could be key to working successfully using a differentiated approach in an ever evolving FCAS environment. Further evidencing this, the Pacific Approach 2016–2020 knowledge program sought to “deepen ADB’s understanding of the development challenges of the Pacific region,” among other things. The need for increased internal knowledge of development challenges in the Pacific and knowledge products indicates a lack of context-specific knowledge in ADB, which could in part be addressed through increased employment of staff from Pacific DMCs, particularly at Headquarters in Manila, and not necessarily within PARD.

76 The expansion involved the conversion of four extended missions in Samoa, Solomon Islands, Tonga, and Vanuatu into country

offices, and the establishment of seven new country offices in the Cook Islands, FSM, Kiribati, Nauru, Palau, RMI, and Tuvalu. Prior to the establishment of extended missions and country offices, all PIC-11 countries were being assisted by TA-financed long-term consultants who provided liaison, coordination, and capacity building support on the ground.

77 ADB Budget, People and Management Systems Department (BPMSD), Management and Staff Representation of ADB Members. Dated 31 December 2019.

78 The staff profile list provided to IED was based on the citizenship nominated by the staff member, and does not provide information on dual citizenship.

Validation of the Country Partnership Strategy Final Review 25

70. Innovative approaches to capacity building and project design and implementation. PARD adopted the Project Improvement Action Plan (PIAP) in 2015 to help (i) increase implementation support in the PIC-11, (ii) improve project preparation, (iii) streamline procurement, and (iv) increase donor coordination. The regional technical assistance (RETA) for Building Project Implementation Capacities in

the Pacific is a key source of funding for the PIAP.79 The TA of $1 million from the TA Special Fund is being used to provide technical and advisory support to counterpart agencies responsible for implementing projects. It has helped to improve efficiency in the Pacific by providing on-the-ground assistance, and build capacity development in procurement, safeguards, financial management, disbursements, portfolio reviews, and project management. Demonstrating high demand among Pacific DMCs and the effectiveness of in-country assistance, the TA was approved in March 2016 with an initial allocation of $1million and by November 2019 it had received additional financing of $4 million for continued support in project implementation (the cumulative financing of the RETA is now $5 million). The RETA has supported about 30 projects in several Pacific DMCs through, for example, workshops and training (Appendix 13). The project readiness facility (PRF) is an even more important initiative that is helping to improve project design and implementation readiness. In 2019, PARD processed five PRFs focusing on the transport, water, and urban sectors, amounting to about $47 million. 71. The PRIF has helped in the design and implementation of many infrastructure projects. Launched in 2008 as a multi-partner coordination and TA facility for improved infrastructure in the Pacific, the PRIF is administered by ADB and cofinanced by the governments of Australia and New Zealand. The PRIF provides an interface between development partners and DMCs to improve the quality and coverage of infrastructure and service delivery. It also enhances the coordination of PRIF partner investments in the Pacific and provides TA on infrastructure development and sustainable infrastructure management to PRIF partners and DMCs. It has helped improve project effectiveness and efficiency. 72. Efficiency of operations categorized in terms of the three strategic priorities. The CPSFR did not discuss or rate the efficiency of projects. Of the 14 projects and programs for which PCRs are available, two are rated highly efficient, eight are rated efficient, three are rated less than efficient, and one is rated inefficient. These ratings were consistent with the ratings provided in the nine corresponding PVRs. A detailed assessment of the efficiency of individual projects in the three strategic areas is provided in Appendix 7. In summary, the validation assesses the ADB-supported projects against the strategic priorities as follows: managing risks—efficient; and reducing costs and enabling value creation—less than efficient. However, given the discussed measures taken by PARD to improve internal efficiency, the rating for projects reducing costs is recorded as efficient. 73. CPSFR validation overall efficiency rating. The validation assesses ADB-supported operations and the portfolio performance efficient. The CPSFR did not discuss the efficiency of projects approved and/or implemented over the Pacific Approach, 2016–2020 period to confirm that projects generated a given level of benefits and reflected least-cost methods of providing ADB support in a timely manner. The validation found evidence that ADB has applied some new project design practices and taken organizational and business process measures to improve its project administration in the Pacific region, which gives confidence that a satisfactory level of efficiency of new and ongoing projects may be realized in the future.80

Sustainability 74. The CPSFR rated the performance of ADB-supported operations during the Pacific Approach, 2016–2020 period likely sustainable, based on ADB support being designed to address core risks to the physical, financial, environmental, and social sustainability of projects. The historical lack of asset

79 ADB. 2016. Technical Assistance for Building Project Implementation Capacities in the Pacific. Manila. Initial allocation was $1

million with additional financing of $4 million in November 2019. 80 The validation has used judgement to give greater primacy to the performance of ADB’s improved internal efficiency in its support

to the PIC-11.

26 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

maintenance in the PIC-11 remains a key barrier to sustainable infrastructure development and this is often attributed to lack of technical capacity and financing, particularly for O&M. ADB’s approach to address sustainability risks includes (i) using sector support and programmatic financing to strengthen institutions alongside infrastructure; (ii) leveraging regional approaches to deliver capacity building at scale and support the PIC-11 in pooling resources and sharing best practices; (iii) integrating climate-resilient design features into investments, where possible; and (iv) collaborating with development partners to ensure continued investment and support. 75. In validating the sustainability criteria in a CPSFR, IED seeks evidence of sustainability based on the likelihood of increases in: (i) adequacy of financing, O&M, and other factors; (ii) institutional and human resources capacity; (iii) policy and political support, and technical, social, and environmental aspects; and (iv) the adequacy of risk mitigation arrangements. Two of the 14 PCRs rated projects highly sustainable, 10 likely sustainable, one less than sustainable, and one unsustainable. However, four out of nine validated projects were assessed less than likely sustainable or unlikely sustainable. Of these two PVRs downgraded sustainability ratings from likely sustainable to less than likely sustainable (for the Solomon Islands Economic Growth and Reform Program and Kiribati Road Rehabilitation Project); one PVR agreed that the Fiscal Resilience Improvement Project (Samoa) was less than sustainable; and one PVR agreed that the Provincial Renewable Energy Project (Solomon Islands) was unsustainable. 76. The CPSFR does not provide evidence of adequate capacity building to ensure sustainability. The CPSFR states that (i) projects focused on building the capacity of institutions to plan and implement pipelines of projects, including in O&M, while improving the commercial performance of utilities and SOEs through reforms; and (ii) ADB support has increasingly engaged local contractors and built capacity to increase the availability of domestic skilled labor and capable institutions. The CPSFR also mentions that the increased share of sector operations through PBLs and MFFs is helping to improve infrastructure and ensure capacity building to manage and maintain them. But the validation notes that the only MFF included in the program is a regional education program involving the University of the South Pacific (USP), and that this MFF does not have the sequential capacity building aspects of a typical MFF that would build capacity in the executing and implementing agencies. This is because the MFF supported consecutive programs in the USP campuses in Tarawa (Kiribati), and Honiara (Solomon Islands), and consequently the sequential capacity building only applies to USP. 77. ADB is adopting new approaches to strengthen sustainability. The CPSFR noted that in both the previous and current strategy, project loans and grants were the dominant form of assistance by volume and number. However, the number and value of longer-term programmatic interventions is increasing and ADB expects to continue raising the volume of programmatic assistance. During 2010–2015, ADB had 16 PBLs and grants in the PIC-11 with a value of about $120 million and intends to process a total of 29 program loans and grants during 2016–2020 for a total value of $261.6 million. The CPSFR also notes that ADB is increasingly using new instruments like the PRF, which allows countries to proceed with project preparatory activities, including detailed design, in advance of the approval of the total project financing. While these are expected to help improve the institutional preparations needed to strengthen sustainability in the future, the intended benefits are yet to be realized. 78. Sustainability of projects in FCAS locations. The CPSFR did not examine the sustainability of projects in the FCAS context. The likelihood of delivering sustainable projects in fragile situations is less, relative to non-fragile situations. This is because of the unique, pervasive, and perpetual challenges and constraints faced in these environments. While it is possible to achieve sustainable outcomes in an FCAS environment, it is more challenging because projects require more time, support, supervision, patience, persistence, and care. This is also in part why the cost of delivering sustainable development outputs and outcomes in fragile countries is often substantially higher as well. The micro-macro paradox is inherent

Validation of the Country Partnership Strategy Final Review 27

in fragile countries.81 This means that while ADB and other development partners can deliver projects in the Pacific, the precarious and fragile circumstances will often prevent that support from being ultimately sustainable or impactful. The micro-macro paradox in the Pacific is a ‘wicked problem’, a problem that is so complex that it has no determinable stopping point. 79. Sustainability of projects against the three strategic priorities. PVRs found that 56% of projects were likely sustainable, less than the ADB average. An assessment of ongoing projects is also less positive. In examining sustainability against the three strategic priorities of reducing costs, managing risks, and enabling value creation, the overall program is assessed on balance as less than likely sustainable (Appendix 7). Historic sustainability issues in the Pacific identified in PVRs are related to limited government capacity, financial resources committed to O&M, and commitment to reforms in the absence of ongoing development partner funding and support. Sustainability of ADB support is likely to be further impacted as the long-term implications of a protracted COVID-19 pandemic unfold, and climate change impacts in the form of devastating tropical cyclones, floods, and king tides are intensifying. 80. CPSFR validation overall sustainability rating. The validation assesses ADB’s program under the Pacific Approach, 2016–2020 less than likely sustainable. Evaluations over the years have systematically identified the weak capacity of implementing agencies, in particular for O&M and asset management, as the root causes of projects underperforming in the Pacific. ADB has not yet paid enough attention to the need for longer term and transformational capacity development efforts; and to planning and financial support for O&M to ensure both effectiveness and sustainability. The PIC-11 face huge challenges associated with fragility, which will continue to indeterminately impact sustainability. Historical funding concerns for O&M and limited technical capacity, as shown through several transport and other infrastructure projects, highlight the need for asset maintenance plans and budgetary appropriations. Despite the funding and technical capacity concerns, new instruments such as the PRF are expected to reduce the risks of diminished sustainability through improved project designs.

Development Impacts 81. The CPSFR rated ADB’s overall contribution to development impacts satisfactory and, in doing so, examined the impacts of selected projects under the three strategic objectives. The CPSFR did not examine development impacts in terms of progress towards government targets or impacts relating to ADB’s strategic priorities. For example, it did not examine drivers of change or discuss environmental sustainability, safeguards, knowledge solutions, and partnerships as separate themes. The CPSFR did not include information on the achievements of the results framework. PVRs generally rated the development impacts of individual projects satisfactory (see below). In undertaking additional research to fill the gaps, the validation sought to provide positive examples of how projects are likely to be providing development impacts, and in doing so does not offer counterfactual perspectives.

1. Progress toward the overall targets of the 11 country and strategic priorities 82. The Pacific Approach, 2016–2020 results framework was not a useful tool for measuring the achievements of ADB’s portfolio (paras. 46–47). The CPSFR did not examine country and regional results relative to the three strategic priorities or the three SDGs, nor did it confirm the extent to which ADB support contributes to national strategies and plans in the 11 countries or the region. The lack of measuring, monitoring, and reporting progress or performance against the results framework or national strategies and plans constrained the validation’s ability to verify that ADB support has provided noticeable development impacts against the three strategic priorities. A summary of economic and human development indicators for the PIC-11 countries is provided in Appendixes 14 and 15. Assessment

81 S. Howes, S.A. Otor, and C. L. Rogers. 2011. Does the World Bank Have a Micro-Macro Paradox or Do the Data Deceive?

Development Policy Centre Discussion Paper No. 5. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=1885227. The micro-macro paradox occurs where success at the project (micro) level, is not necessarily translated to improvement at the country (macro) level.

28 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

of projects against the three strategic priorities showed some signs of satisfactory impacts; however, the validation was not well placed to undertake additional research to enable a comparative analysis of the same indicators covering 2016–2020.82

2. ADB’s Strategic Agenda

83. Inclusive growth. Projects included under the reducing costs strategic objective all targeted growth, although not necessarily inclusive growth. The Pacific Approach, 2016–2020 states that its three-pronged strategy will address challenges for achieving more inclusive economic growth, together with job creation, and improved human development outcomes, but these were not captured in the results framework as higher level outcome target areas. The Solomon Islands provincial renewable energy project specifically targeted access in the underserved provincial capital of Auki, Malaita Province. The FSM renewable energy project targeted the small, isolated state of Yap, while the whole population of Nauru benefited from the power sustainability project. The Solomon Islands transport sector project was expected to benefit remote rural populations as well as the national population; and generate important additional benefits for the socially vulnerable, including women, children, and people living with disability. The Solomon Islands economic growth reform project aimed to provide an enabling environment to stimulate economic growth, especially in rural areas. 84. Environmental sustainability and disaster risk management. This strategic agenda is intrinsically aligned with the second Pacific Approach, 2016–2020 strategic priority. The strategy planned to help the PIC-11 manage their risks from natural disasters and climate change impacts by strengthening institutional capacities and promoting sound PSM; building resilience to climate change and natural disasters; safeguarding sensitive natural resources; and improving health and social protection services. Environmental assessments were carried out for all projects, and mitigation measures were included as appropriate, with compliance recorded as successful in PCRs. The completed Samoa power project included a focus on developing clean energy resources through the establishment of the Clean Energy Fund, a clean development mechanism. All the renewable energy projects focused on wind, solar and hydro power, reducing the need for imported diesels fuels and reducing carbon emissions. The strategic priority of managing risks targets climate change adaptation and disaster resilience, including climate-proofing measures being integrated into infrastructure projects to help ensure sustainability. New and ongoing programs focus on disaster resilience in eight of the PIC-11 and are expected to help improve environmental sustainability. While ADB infrastructure is being climate-proofed, clean energy promoted, and support provided for DRM, the Pacific Approach, 2016–2020 and CPSFR do not address the fundamental causes of the increased fragility in the PIC-11 associated with climate change. For example, bolstering a seawall in Tonga will help the community to address the impact of sea-level rise in the short term, but does not address the long-term sustainability issues for communities residing precariously behind the seawalls. 85. Regional cooperation and integration. Greater collaboration at the regional and subregional levels mitigates the constraints of lack of economies of scale and the extreme remoteness of the PIC-11. The CPSFR noted greater use of regional and subregional approaches in ADB projects in the PIC-11 during the strategy period. ADB approved 10 projects with RCI as a theme from 2010 to 2015, and 16 projects from 2016 to 2019 (a 60% increase in number) with a total value of $438 million (a 41% increase in value). Examples or evidence were not provided to demonstrate how these interventions contributed to mitigating these constraints. The validation has not been able to reconcile these numbers with the database for regional projects. The database shows five specific regional projects (nine if separate phases of these projects are counted), totaling $137.7 million – higher education in the Pacific ($3.6 million and $15.4 million); basic education in the north Pacific ($6.5 million and $6.5 million); Pacific Disaster Resilience Program ($15 million and $24 million covering seven countries); Pacific vaccines program ($25.1 million) covering four countries; and Micronesia internet connectivity ($41.6 million covering two

82 The level of research required to undertake this analysis would require IED to ‘evaluate’ as opposed to ‘validate’ the Pacific

Approach 2016−2020.

Validation of the Country Partnership Strategy Final Review 29

countries). Reports and recommendations of the President (RRPs) categorize individual projects’ contribution to ADB’s three strategic objectives (inclusive growth, environmentally sustainable growth, and RCI). Examination of these RRPs shows 15 additional projects citing RCI as a strategic objective, but several with very tenuous links and rationale. For example, national infrastructure projects cited RCI as a regional public good; two reform programs cited monetary and financial integration. Excluding these, the validation identified six internet connectivity projects totaling $92.7 million (Cook Islands $15 million; Palau $25 million; Samoa submarine cable $25 million; Solomon Islands $10.5 million and $7.5 million; and Tonga submarine cable $9.7 million) and a disaster resilience program in the Cook Islands of $10 million, which would be in line with the specific regional projects covering internet connectivity and disaster resilience. However, the total is $240 million, well below the total support estimated in the CPSFR. 86. The validation questions whether these are all truly RCI programs.83 The internet connectivity programs are integrating internet connectivity within the region and require country coordination and cooperation, and so may be classified as RCI. Grouping the disaster resilience programs together as a regional project makes sense if there are cost savings from a regional project approach, sharing input skills, and if lessons and experiences are exchanged across the programs; but, in reality, they are individual country targeted projects. Similarly, grouping the education projects together as regional projects may produce cost savings and shared information, but the only real regional aspect is USP being the prime support for the higher education programs. The vaccines program may similarly attempt to deliver regional cost savings and shared experiences; but feedback from counterparts in one PIC country suggests that the project is unrelated to RCI and that joining with other countries is simply expected to enable more buying power across the participating countries (i.e., economies of scale) with no RCI benefits. Feedback also indicated that working through a ‘regional’ investment had detrimentally slowed progress from a standalone country perspective.

3. Drivers of Change

87. Gender equity. The CPSFR states that ADB has mainstreamed gender into project designs, supported policy dialogue on gender equality, and built the capacities of governments to develop, deliver, and monitor gender equality results. Transport, education, and other projects contain gender elements. Transport projects are expected to have enhanced mobility and reduced travel time for women, enabling better access to services, and more livelihood and income opportunities, but no evidence is available to support this assumption. Education and skills training programs are similarly expected to have helped women to gain employment in non-traditional sectors, such as power systems maintenance. Financial literacy programs enabled women to open bank accounts and establish savings habits. Water, energy, health, and ICT projects are expected to have reduced challenges faced by women. PCRs and PVRs for completed projects indicate that while gender action plans (GAPs) were included in many projects, they had varied rates of success. ADB’s work in gender-inclusive development is assessed less than satisfactory. 88. The infrastructure and power projects under the reducing costs strategic objective were mostly classified as effective gender mainstreaming (EGM) and prepared GAPs, although a power project in Nauru was classified as having no gender elements (NGE) and the road rehabilitation project in Kiribati had some gender elements (SGE); GAPs were not required in these cases. The PCRs for these projects all reported briefly on the achievements of the GAPs. GAPs include targets, but the projects involved do not have a subcomponent targeted at gender equity. The Samoa fiscal resilience reform program and the cyclone recovery project in Tonga under the second strategic objective of managing risks were classified as NGE and did not make any references to gender, although the Solomon Islands Flood Recovery Project was classified as EGM and prepared a GAP. Under the third strategic objective of enabling value creation,

83 The RCI strategy pillars include: (a) subregional economic cooperation programs on cross border infrastructure and related

software, (b) trade and investment cooperation and integration, (c) monetary and financial cooperation and integration, and (d) cooperation in regional public goods.

30 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

the two reform programs in Nauru and the Solomon Islands were classified as NGE and SGE, respectively, and did not refer to gender, although the Solomon Islands program PCR recorded the achievement of the inclusion of gender mainstreaming in the new National Development Strategy. The Higher Education in the Pacific Investment Program (MFF) was classified as EGM and prepared a GAP. However, the Samoa SchoolNet project and the Japan Fund for Poverty Reduction (JFPR)-financed community sanitation project were not classified for gender and provided no information on gender outcomes, although in its background text the SchoolNet project referred to gender disparities having been eliminated at the primary level and declining at the secondary level. Gender is not discussed in the ICM prepared for the JFPR project, which is surprising, since it was a community targeted project. This indicates that opportunities to incorporate gender elements in projects were not always taken and results were not consistently reported, affecting relevance as well as development impact. 89. PCRs for the completed power projects show mixed success from a gender equity perspective.

(i) Federated State of Micronesia: Yap Renewable Energy Development Project. The GAP included targeting women’s participation in project construction and management activities and the training of women to participate in income-generating activities. The project led to important, long-term, and sustainable changes in the lives of women through focusing on supporting women in technical, non-traditional employment, showcasing that women can carry out technical roles to a high standard; however, other income generating opportunities remain limited. The project met 60% of targets and 45% of the activities outlined in the GAP and so implementation against the GAP was rated unsuccessful.

(ii) Samoa: Power Sector Expansion Project. Was classified SGE. ADB carried out a gender review mission in 2016 to assess gender equality results, with a focus on whether women have benefited from the project, particularly women in small businesses. While there were no proactive gender design features, the review found that the project resulted in practical gender benefits for women. Specifically, improved reliability and continuous electricity supply reduced the time spent on housework and increased women’s working hours, which contributed to reducing time poverty and creating additional or new income by expanding an existing business or opening a new one.

(iii) Nauru: Electricity Supply Security and Sustainability Project. The confined nature of the works in the project presented limited, if any, opportunities for gender-sensitive designs or enhanced participation of women in the project and therefore the project was classified NGE, and so a GAP was not required.

(iv) Solomon Islands: Transport Sector Development Project. The PCR shows that, at completion, 85% of activities and 75% of numeric targets in the GAP were achieved. Improved roads and wharves helped women diversify their economic activities, expand agricultural production, and have better access to health services. Realistically, this is also the case for men. Despite this, it concluded that the gender benefits achieved are significant in the Solomon Islands context, where women remain one of the most vulnerable groups and are mostly involved in unpaid work.

(v) Kiribati: Road Reconstruction Project. Gender was not discussed in the PCR or PVR for the project, which had been classified SGE.

90. Other projects also showed mixed results regarding gender equity.

(i) Solomon Islands: Transport Sector Flood Recovery Project. Although the project met its GAP targets, these had been lowered in 2017 as the target of 30% women laborers was unrealistic (women in the project area were discouraged from working at the construction sites because of responsibilities at home and cultural obligations) and was reduced to 10%. Furthermore, separate women facilitators were not required as the female project administration members could assist in ensuring women’s participation

Validation of the Country Partnership Strategy Final Review 31

in community consultations. Project interventions incorporated the recommended gender-conscious designs, such as footpaths, railings, and pathways to access the river for all high-level bridges. Contractors were encouraged to employ local workers and maximize the use of women laborers in labor intensive activities.

(ii) Higher Education in the Pacific Investment Program (MFF) (EGM). The PVR rated GAP achievement as only partially successful. The outreach activities to encourage females to enroll were carried out, but not in remote areas. Project indicators were disaggregated for gender, but the project did not regularly monitor performance on gender indicators. The training on HIV/AIDS and gender issues was not provided for construction workers and women were not employed for construction work. The gender target in the project outcome that 30% of women students would be enrolled in degree programs was exceeded. Two of the three gender output targets were achieved: (i) women comprising 50% of students studying online, and (ii) the inclusion of sex-disaggregated data in the education management information system. The third output target that women should hold 40% of management-level positions by 2016 was not achieved.

91. Insufficient information exists on gender achievements for new and ongoing programs. Only three projects are categorized gender equity, under strategic priority 3, enabling value creation. The regional Systems Strengthening for Effective Coverage of New Vaccines in the Pacific Project does not have a separate women’s component, but includes GAP with targets and disaggregated data in the design and monitoring framework, and implementation will include working with women’s organizations. Phase 2 of the higher education project and the Introducing eGovernment through Digital Health Project in Tonga include gender targets, but have no separate gender subcomponent. Despite known gender problems in the Pacific, no project in the portfolio includes a specific project component or subcomponent targeted at gender. Under the reducing costs strategic objective, 60% of projects are categorized SGE (mostly infrastructure) or EGM (infrastructure and all the energy projects), while 40% are categorized NGE, including all the ICT projects. Under the managing risks objective, most projects are categorized SGE and EGM (all water supply and urban development projects), although several reform programs are categorized NGE. The projects categorized EGM have GAPs with targets. Apart from the three projects noted as GEN above, most of the projects under strategic priority three (enabling value creation) are water supply and sanitation and urban improvements and are categorized as EGM. 92. Knowledge Solutions. The Pacific Approach, 2016–2020 outlined a knowledge program for the PIC-11, which sought to (i) deepen ADB’s understanding of the development challenges common to the Pacific region, (ii) underpin ADB’s engagement in policy dialogue on development priorities, (iii) support ADB’s business development at the country and regional levels, and (iv) facilitate the cross-country learning and knowledge sharing from development experiences in other regions. The focus on increasing ADB’s knowledge, as opposed to developing knowledge for the benefit of PIC-11 decision makers, indicates that it was an internally focused knowledge strategy designed to increase ADB knowledge of how to work more efficiently and effectively in the PIC-11. A knowledge program of this type is rare for ADB and other development partners working in the region as it indicates that ADB may not be employing staff with tacit knowledge of development in the Pacific, a key to working successfully using a differentiated approach in a predominantly FCAS environment (see para. 69). 93. Knowledge plans were updated annually in the ROBP and PIC-11 COBPs, which list expected knowledge products and events. Counterparts and stakeholders identified the usefulness of key economic products including the semi-annual Pacific Economic Monitor and the Asian Development Outlook. Other regular key products include regional updates on energy, transport, and WUS. Other occasional studies have also been prepared on health, gender, social protection, fisheries, private sector assessments in individual countries, and other private sector opportunities. Some of these have been prepared under RETAs, PRIF, and PSDI. Dissemination is usually via the web and as such is a passive modality, but occasional events are held to disseminate information such as the Pacific Economic Monitor and the Asian Development Outlook launches, and in 2019 an International Skills Forum, 3rd Asia Finance Forum,

32 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

and the Asia Pacific Social Protection week. The 2019 review of PRIF briefly discusses the numerous and valuable knowledge products produced, some in collaboration with ADB. The TA paper supporting Phase IV of PSDI states that PSDI will continue to produce flagship publications to share best practices and establish a research basis for future subprojects. PSDI maintains a website and social media account and shares content with ADB’s website and social media accounts. This will be expanded to partner websites and social media accounts. Discussion with staff and consultants preparing, monitoring, and assessing projects, and with PSDI and PRIF, indicate the value of this knowledge information, particularly the regional energy and infrastructure comparisons and the Pacific Economic Monitor. 94. During the IED Knowledge Solutions for Development evaluation mission to the Pacific in October 2019,84 counterparts from eight countries informed the mission that they would like ADB to carry out more capacity development, with an increase focus on knowledge and gender. They advised that ADB can add further value through more: (i) long-term capacity development plans and programs for key implementing agencies; (ii) knowledge sharing between and among countries; and (iii) studies on gender. While the CPSFR did not include an assessment of knowledge products, additional research undertaken by the validation suggests that counterparts and other development partners appreciate ADB knowledge products and they would like more, indicating a satisfactory impact. 95. Partnerships. The Pacific Approach, 2016–2020 aimed to strengthen partnerships with other development partners and leverage cofinancing opportunities (paras. 32–33). ADB coordinated closely and cofinanced projects with Australia, New Zealand, Japan, the EU, and the World Bank. Discussion with counterparts and development partners confirmed that improved coordination and increased cofinancing had expanded the absorptive capacity of the small, fragile, PIC-11. For example, the government of Tuvalu informed that increased ADB coordination with other development partners through the Joint Policy Matrix on a policy-based grant had reduced the burden on the government to engage with multiple development partners separately, enabling time to focus on its core business concurrently. Australia, New Zealand, the EU, the World Bank, and Japan have development strategies and plans that guide their support for the development of the PIC-11 and/or the region as a whole. These strategies are relatively compatible with the Pacific Approach, 2016–2020 and enabled ADB to attract more support in a number of sectors using different modalities to leverage funding. ADB is yet to harmonize development efforts in the PIC-11 with the PRC, which is a significant development partner for many Pacific countries. Overall, partnerships have delivered satisfactory development coordination impacts. 96. Good governance and capacity development. The PIC-11 continue to grapple with capacity challenges faced by all fragile countries, impacting absorptive capacity and successful project delivery. Despite ADB and development partners providing continuous capacity building support to the PIC-11, weak capacity continues to affect absorptive capacity and program effectiveness, efficiency, and sustainability. The Pacific Approach, 2016–2020 and CPSFR did not cover governance and capacity building as a driver of change, but the strategy covered capacity building and the PIAP. The CPSFR provided some information on support for capacity development, but did not assess the effectiveness or impact of efforts. ADB support for capacity building in project processing and implementation, following adoption in 2015 of the PIAP, including the RETA for Building Project Implementation Capacities in the Pacific, is discussed in terms of efficiency (paragraph 71). Despite the RETA’s support for about 30 projects and its extensive capacity development activities, no assessment has yet been made of its achievements. 97. Some projects to improve governance have been successful. Assistance for improved governance is included within the managing risks and enabling value creation strategic priorities. PVRs rated Nauru’s Fiscal Sustainability Reform Program and the Solomon Islands’ Economic Growth and Fiscal Reform Program successful. However, the PCR rated Samoa’s Fiscal Resilience Program less than successful. Several ongoing programs are providing governance and capacity development support, including the

84 IED. 2020. Knowledge Solutions for Development: An Independent Evaluation of ADB’s Readiness for Strategy 2030. Manila:

ADB.

Validation of the Country Partnership Strategy Final Review 33

Strengthening Economic Management Reform Program (Kiribati), Public Financial Management Project (RMI), Improved Fiscal Sustainability Reform Program (Solomon Islands), Building Macroeconomic Resilience (Tonga), and Improved Fiscal and Infrastructure Management Program (Tuvalu). While it is too early to assess their impact, there is a risk that performance will be adversely impacted by COVID-19. 98. During the validation mission, partner governments appreciated the governance and capacity building support provided by ADB and other development partners. However, they noted that most ADB support currently focuses on improving capacity to implement ADB projects, and as such does not fully address the root causes or challenges of weak capacity that are inherent in the respective countries. Counterparts requested support to shift toward a longer-term and transformative approach to nation-wide capacity development. 99. Private Sector Development. ADB supported private sector development through selected PBL and grant operations, focusing on business law and SOE reforms and competition policies; long-term TA program interventions through the PSDI; and nonsovereign operations. The effectiveness of this support is discussed in Part F below. 100. Development impacts of projects against the three strategic priorities. PVRs found seven of the nine projects assessed as having satisfactory development impacts. Projects with PVRs that were assessed successful overall, relevant, effective, and sustainable were more likely to also achieve development impacts.85 Due to time and information constraints, the validation sought and provided positive examples of how completed, ongoing and mature projects are likely to provide development impacts against the three strategic objectives. In doing so this validation does not offer counterfactual perspectives. In examining the development impacts of projects in the three strategic areas the validation identified less than satisfactory development impacts for those projects included in reducing costs, and satisfactory development impacts for projects classified as managing risks and enabling value creation (Appendix 7). 101. CPSFR validation overall development impacts rating. On balance, the validation assesses development impacts less than satisfactory. The CPSFR examined development impacts against the three strategic priorities, but did not provide evidence or examine performance against ADB’s strategic agenda and drivers of change. To overcome this, the validation undertook additional research to find new information to identify early impacts at the project level. This research into the ADB strategic agenda and drivers of change revealed less than satisfactory development impacts for RCI, gender equity, environmental sustainability, capacity development, and private sector development (Chapter 2, Section F). The projects are likely to be providing development impacts against the strategic priorities of managing risks and enabling value creation, but less than satisfactory impacts for reducing costs.

Private Sector Development and Nonsovereign Operations 102. Pacific island countries face significant and complex development challenges that constrain private sector growth and development. Challenges include great distance from centers of private sector business, the high cost of doing business because of remoteness and low local demand, inadequate infrastructure, outdated legal systems, inadequate business and technical advisory services, and land rights issues. The financial sector is underdeveloped, with a low ratio of private sector credit to GDP. Businesses of all sizes have difficulty securing commercial finance. Small and medium-sized enterprises (SMEs) are particularly affected, because commercial banks in the region extend little credit to this segment. Opportunities for businesses to raise additional capital through stock exchanges are limited. Since 2010, the economic ministers of the Pacific Islands Forum have annually called on development partners to help increase access to finance for SMEs. ADB’s Midterm Review of Strategy 2020 emphasized ADB’s intention to expand support for SME finance.86

85 Examples include the Electricity Supply Security and Sustainability Project and Fiscal Sustainability Reform Program in Nauru; and

the Higher Education in the Pacific Investment Program-Tranche 1 in Kiribati. 86 ADB. 2014. Midterm, Review of Strategy 2020. Meeting the Challenges of a Transforming Asia and the Pacific. Manila.

34 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

103. The CPSFR states that ADB is addressing these needs through the PSDI, which is helping to create an enabling environment for business and investment in the Pacific by: (i) financing growth, (ii) supporting business law reforms, (iii) providing advisory services for PPPs and SOE reforms, (iv) supporting the economic empowerment of women, and (v) designing and strengthening consumer protection and competition policies.87 PSDI’s major accomplishments to date have been in improving the legal and regulatory frameworks for finance and enterprise development in the PIC-11. PSDI has encouraged policy and legislative reforms that help expand access to loans and significantly reduce the time and cost of starting a business. However, these policy reforms have yet to be reflected in the expansion of private sector investments or financing in the PIC-11, given the small markets and perceived higher risks. 104. The three consecutive phases of PSDI implemented since 2007 have helped Pacific DMCs carry out reforms and introduce new policies to improve conditions for private sector development and investment, responding to related needs and opportunities as they evolved. PSDI has disbursed $60.83 million during the first three phases, which funded more than 600 subprojects. This included grant cofinancing of $54.73 million from Australia and New Zealand, which reflects the importance and value that development partners place on introducing reforms and building capacity for private sector development in the Pacific. An IED evaluation of the PSDI, 2007–2017, found that the first three phases helped provide several important inputs necessary for establishing modern, functioning private sectors in Pacific DMCs and remained relevant.88 PSDI’s analytical work has served to underpin its interventions. The IED evaluation recognized PSDI’s many contributions to improving the private sectors of Pacific DMCs, and found its demand-driven operating model efficient and highly valued by Pacific DMCs, and that it added to and complemented other ADB projects and initiatives. The report also suggested that ADB should have provided better strategic guidance and found that delivered outputs did not fully achieve the intended outcomes. Discussions with PSDI in Sydney revealed that ADB should have done this through its membership of the Steering Committee, with the governments of Australia and New Zealand playing major roles. While it is appropriate for ADB to utilize PSDI as its main operating partner, it must be acknowledged that PSDI has its own identity. It is complementary to regional and national partnership strategies. This means that the Pacific Approach, 2016–2020 results framework can be aligned with PSDI’s long-term monitoring and evaluation framework, with the linkages being shown. In addition, PSDI can be part of country consultations, though it does not have focal points in-country. 105. ADB is supporting private sector growth by making direct investments in the private sector in the PIC-11 and by providing transactional support for PPPs. The CPSFR states that ADB has considerably scaled up support for private sector development during the strategy period and will continue to deepen involvement through its Private Sector Operations Department (PSOD). However, only one investment is reported, a direct $3 million investment in an independent power producer in Samoa in 2017. Having deployed a senior consultant to Sydney in 2018 to cover Pacific countries, PSOD is now working to identify and support investment opportunities in six priority areas: renewable energy, financial institutions, telecommunications, fisheries, tourism, and agribusiness. ADB’s Trade Finance Program concluded credit agreements with two Samoan banks in 2016 and a bank in Fiji in 2017. In 2019, ADB approved two innovative programs to encourage private sector investments.

(i) Pacific Renewable Energy Program.89 The program, which has a $100 million risk-backing structure, is expected to improve project bankability for independent power producers seeking finance for renewable energy projects. The program is an umbrella facility

87 PSDI is now in Phase IV, having started in 2007. The TA is mostly funded by Australia and New Zealand governments and is

administered by ADB. ADB. 2006. Technical Assistance for Private Sector Development Initiative. Manila; ADB. 2009. Technical Assistance for Pacific Private Sector Development Initiative, Phase II. Manila; ADB. 2013. Technical Assistance for Pacific Private Sector Development Initiative, Phase III. Manila.

88 IED. 2018. Performance Evaluation Report. Pacific Private Sector Development Initiative. Manila: ADB. 89 ADB. 2019. Report and Recommendation of the President to the Board of Directors: Proposed Pacific Renewable Energy Program.

Manila.

Validation of the Country Partnership Strategy Final Review 35

providing private sector loans, guarantees, and letters of credit to alleviate barriers to private sector investment in renewable power in the Pacific. The program is a tool for improving the effectiveness of assistance in the Pacific DMCs. It is expected to strengthen overall results in the energy sector by attracting more independent power producers to invest in renewable energy.

(ii) Asia-Pacific Remote Broadband Internet Satellite Project.90 This $50 million loan for a regional satellite project is expected to improve internet connectivity in five of the PIC-11.

106. CPSFR validation overall private sector development and nonsovereign operations rating. The validation finds ADB’s overall contribution to private sector development and nonsovereign operations less than satisfactory because the Pacific Approach, 2016–2020 has not been effective in strengthening private sector development. While PSDI contributions have been significant, the outputs delivered do not always fully achieve the intended outcomes. The business environment in the Pacific remains problematic and new nonsovereign operations only commenced late in the strategy period. Data in Appendix 7, Table 1 from the World Bank publication on ease of doing business shows that the PIC-11 are ranked well below the rest of the region.

ADB and Borrower Performance

107. ADB performance. The CPSFR rated ADB performance satisfactory on the basis that, as envisioned under the Pacific Approach, 2016–2020, ADB is working stronger, better, and faster in the Pacific. ADB has undertaken a raft of measures to improve performance including: (i) greater flexibility in procurement and contract requirements, including an increase in the threshold for the simplified procurement method (shopping) from $100,000 to $300,000; (ii) improvements in staffing and management, as evidenced by the modified organizational structure that increased the number of budgeted staff positions from 113 to 165, segmented operations into four sector divisions, established a Portfolio, Results, and Quality Control Unit, and established Pacific Country Offices in each of the PIC-11 that did not already have a resident mission; and (iii) a stronger focus on building project implementation capacities, as demonstrated through the adoption of the 2015 PIAP, establishment of a RETA on Building Project Implementation Capacities in the Pacific (approved in March 2016), and the continued use of PRIF to help project selection and design and capacity building; (iv) the introduction of innovative financing approaches, such as the Pacific Renewable Energy Investment Facility and Project Development Facility, for preparing infrastructure projects in several countries; and (v) the Pacific Disaster Resilience Program, which provides countries with ready financing in the event of a natural disaster. ADB, however, did not implement systems or processes to measure, monitor, or report performance using evidence at the strategic level. This adversely impacts perceptions of ADB support to the Pacific, because ADB is not able to articulate its contribution or measure its value addition. Nevertheless, ADB has put significant measures in place to improve its efficiency in delivering support to the Pacific, which are expected to improve the effectiveness and efficiency of future support. ADB performance is assessed satisfactory on that basis. 108. Borrower performance. The CPSFR found that the 11 governments and their implementing agencies have all performed satisfactorily, citing continued government commitment to investing in high-impact social and physical infrastructure, establishing sound macroeconomic and sectoral development policies, and working with neighboring countries and development partners to strengthen RCI. The governments have recognized that limited capacity is a persistent constraint, and accordingly they remain reliant on external technical expertise in several sectors, currently financed by development partners. During interviews, government counterparts actively sought more development partner support to

90 ADB. 2019. Report and Recommendation of the President to the Board of Directors: Proposed Loan and Administration of Asia-

Pacific Remote Broadband Internet Satellite Project. Manila.

36 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

address this constraint through a long-term approach that is not tied to a short-term project impact. Consistent with the guidelines91, this report does not rate the performance of the 11 governments.

Overall Assessment

109. The CPSFR rated ADB’s program in the PIC-11 from 2016 to 2020 successful overall. It rated the program relevant, effective, efficient, likely sustainable, and having satisfactory development impacts. The CPSFR also rated the performance of ADB and the borrowers satisfactory. 110. The validation assesses the ADB-supported program performance less than successful and deems it to be relevant and efficient, but less than effective, less than likely sustainable, and having less than satisfactory development impacts (Table 6 and Appendix 16). The CPSFR discussion did not allow a separate rating for the three strategic priorities of the Pacific Approach, even though the portfolio was broken down into these three priorities. Nor were the various sector programs, as discussed in the COBPs, separately rated. This required the validation to adapt its approach in developing a detailed rating table presenting the programs by priority or sector, and providing additional ratings for the relevance and development impacts of the thematic priorities chosen (in this case the three strategic agendas of Strategy 2020 and the five drivers of change). The validation assesses ADB performance satisfactory and declines to rate the PIC-11 borrowers. Table 6: Comparative Assessment of Country Partnership Strategy Final Review and Validation Ratings

Evaluation Criteria

Country Partnership

Strategy Final Review

Validation Ratings

Validation Ratings Validation Comment

Relevance Relevant Relevant Nil.

Effectiveness Effective Less than effective Performance remained low in the Pacific, partly due to the complexities and challenges that are inherent in fragile countries, where weak government capacity and inadequate government support to implementing agencies impede effectiveness. The CPSFR did not provide adequate evidence to support its rating, particularly regarding ongoing mature projects, and much of the additional evidence could not be found during the validation.

Efficiency Efficient Efficient Although the ADB portfolio faces significant implementation challenges and half of the completed projects were rated less than efficient, ADB has improved its internal efficiency in providing support to the Pacific. It is anticipated that positive developments over the period should lead to increased project efficiency in the future.

Sustainability Likely sustainable

Less than likely sustainable

The PIC-11 face insurmountable challenges associated with fragility, which will continue to indeterminately impact sustainability. Historical funding concerns for O&M and limited technical capacity remain extant, as evidenced in several infrastructure projects.

Development impacts

Satisfactory Less than satisfactory

Additional research revealed less than satisfactory development impacts for RCI, gender equity, environmental sustainability, capacity development, and private sector development.

Nonsovereign operations

Not rated Less than successful

The Pacific Approach, 2016-2020 has not been effective in increasing private sector development. PSDI operations are

91 IED. 2015. Guidelines for the Preparation of Country Assistance Program Evaluations and Country Partnership Strategy Final

Review Validations. Manila: ADB.

Validation of the Country Partnership Strategy Final Review 37

Evaluation Criteria

Country Partnership

Strategy Final Review

Validation Ratings

Validation Ratings Validation Comment

effective, but the business environment in the Pacific remains problematic.

Overall rating Successful Less than Successful

The less than effective, less than likely sustainable, and less than satisfactory development impacts ratings lowered the overall rating for the program.

ADB performance

Satisfactory Satisfactory Nil.

Borrower performance

Satisfactory Not rated The decision not to rate this criterion is consistent with the Guidelines for the Preparation of Country Assistance Program Evaluations and Country Partnership Strategy Final Review Validations.

CPSFR quality Not rated Less Satisfactory Limited evidence was provided for ratings and the results framework was not included and completed. The lack of linkages between the Pacific Approach, 2016–2020 results framework and country COBPs, and the monitoring system not requiring reporting on the achievement of results framework outcomes, impeded preparation of the CPSFR.

ADB = Asian Development Bank, COBP = country operations business plan, O&M = operations and maintenance, PSDI = Private Sector Development Initiative, RCI = regional cooperation and integration. Sources: Independent Evaluation Department; ADB. 2019. Country Partnership Strategy Final Review: Pacific Approach, 2016–2020. Manila; and Pacific Department.

Quality of Self-Evaluation 111. As noted against all criteria, limited evidence and justification were provided for the CPSFR ratings, and this was reinforced by a lack of monitoring and reporting against a results framework. The lack of linkages between the Pacific Approach, 2016–2020 strategic priorities (thematic) and COBPs (which report on sectoral priorities), and the monitoring system not requiring reporting on the achievement of results framework outcomes, have impeded the preparation of an evidence based CPSFR, as it has this validation. The CPSFR did not have an executive summary, and much of the information provided in the report was contained in different sections to what is normally expected. For example, the modality selection was discussed as part of the sustainability assessment, as opposed to the relevance assessment; RCI was discussed in the assessment of sustainability instead of development impacts; and no clear distinction was made between lessons and recommendations. The CPSFR was relatively candid in its assessment of capacity constraints, which are a persistent concern in small economies, and articulated the measures that PARD has taken to address these concerns. Substantial issues and lessons were also identified. The recommendation that the next strategy should consider adopting the same structure is not supported by this validation. The recommendation that ADB staff at Pacific Country Offices require more training indicates that ADB capacity to support the PIC-11 has increased, but that absorptive capacity may be equally related to ADB’s ability to deliver as it is to the PIC-11’s ability to take on more operations. Much of the CPSFR analysis of performance is internally focused on ADB efforts to improve its organizational efficiency and effectiveness, while discussion about results in the PIC-11 is scant. Consequently, in reading the report it is difficult to identify ADB value addition or understand how ADB support has contributed to development in the Pacific. The validation found the quality of the CPSFR less than satisfactory.

CHAPTER 3

Key Lessons, Issues, and Recommendations 112. This chapter presents key lessons, issues, and recommendations that emerged from the validation. While the validation agrees with many of the lessons, issues, and recommendations identified in the CPSFR, it does not support the first recommendation that the next strategy adopt the same structure and thematic areas as the Pacific Approach, 2016–2020. Other lessons and recommendations, which the validation supports, relate to the need (i) to improve the absorptive capacity of the PIC-11; (ii) to improve ADB capacity to support the PIC-11; (iii) to address land acquisition earlier; (iv) to prepare sector master plans to guide long-term activities; (v) for ADB to provide long-term support for policy and institutional reforms; and (vi) to improve partnerships.

Lessons 113. When working in fragile countries, it is crucial to thoroughly address the unique country contexts and risks, and provide support using a differentiated approach. Grouping a diverse range of small, unique, fragile countries under a generic thematic strategy, without linking country level goals and priorities to the strategy or its results framework, is not consistent with the differentiated approach recommended for FCAS countries. 114. When programs do not measure and monitor performance at the strategic level, they are less likely to be able to demonstrate the success of a strategy and ADB value addition using evidence-based reporting. Furthermore, poor reporting impedes the ability to learn lessons from experience and impairs perceptions about ADB’s performance. 115. Innovative financing approaches such as the Pacific Renewable Energy Investment Facility and the Project Development Facility can improve the project preparation and approval process. The new Pacific Disaster Resilience Facility is improving the capacity of governments to respond faster to disasters and assist affected persons quicker. 116. Absorptive capacity in the Pacific increases when ADB works in collaboration with other development partners to provide support jointly, e.g., through policy-based loans and grants, as the Joint Policy Reform Matrix approach reduces the burden on government counterparts. Agreement on Joint Policy Reform Matrixes helps to (i) ensure consistency of advice and approach, (ii) ensure government ownership and commitment, and (iii) reduce the burden on small governments that would otherwise need to engage separately with multiple development partners.

Issues 117. The economic crisis caused by COVID-19 has seriously affected the Pacific economies. Pacific countries were among some of the first in the world to recognize the likely impacts of COVID-19 and most were quick to close their borders, restrict domestic movement, and impose states of emergency. While these government measures were indisputably essential in preventing a health crisis, they have imposed significant costs on their people and economies, and this is especially so for the tourism dependent economies.

Key Lessons, Issues, and Recommendations 39

118. Successive ADB Pacific strategies and approaches have supported incremental change, illustrating the difficulty of advancing growth and development prospects in these challenging contexts. ADB is yet to articulate a differentiated strategy that optimally supports sustainable development outcomes and impacts in the Pacific. 119. Inadequate evidence-based monitoring and reporting of results against strategic priorities adversely impairs perceptions about ADB performance in the Pacific. The CPSFR provided limited evidence to enable IED to verify the success of the program. The validation therefore exerted significant efforts to find additional relevant information, but with limited success. The onus of the proof of delivery of results lies with the operations department’s final review. The lack of evidence is more serious given the history of weak performance, as documented by the success rates of completed operations in the Pacific. 120. The PIC-11 continue to grapple with the capacity challenges faced by all fragile countries, impacting absorptive capacity and the successful delivery of investments. This is despite ADB and development partners providing continuous capacity building support to the PIC-11. 121. The growing scale, scope, sources, and nature of development assistance to the Pacific are leading to a proliferation of projects and programs and a more congested landscape, potentially impacting absorptive capacity. This demands better coordination among partners and stronger efforts to improve aid management capacity in the PIC-11.

122. Underfunding of O&M and a lack of local technical capacity impairs project sustainability. This increases the risk of infrastructure failing to reach its anticipated design life, consequently diminishing intended benefits.

Recommendations to ADB 123. Recommendation 1: Develop a Pacific strategy and approach, possibly interim, targeted at addressing the twin health and economic crises caused by the COVID-19 pandemic. It may not be prudent to establish a 5 year ‘business as usual’ Pacific strategy until the short- to medium-term impact of the COVID 19 pandemic is addressed. 124. Recommendation 2: Develop a strategy for the PIC-12 (now including Niue) that articulates a transformative, differentiated, and FCAS approach. The strategy should not be confused with an implementation plan for the Pacific, such as the Pacific Approach.

(i) The next strategy should define the context; state a development goal and objectives; demonstrate alignment with the 12 respective national development goals, strategies, and sectoral priorities (e.g., in a one-page annex for each country); outline an implementation approach, including a monitoring, evaluation, and learning plan; and include an integrated results framework that has clear links to regional and country priorities and activities as well as Strategy 2030 and its operational priorities.

(ii) A strategy that is focused on a goal of economic growth and human development, would enable ADB to work in areas of comparative advantage, including support for transport infrastructure, ICT, renewable energy, PSM [including support for better PFM, SOE reform, disaster risk management and mitigation, disaster response, WUS, education, and health.

(iii) ADB should develop a transformative approach to capacity building and climate change. Current capacity building efforts primarily focus on improving national capacity to deliver ADB investments, and thus do not address the root causes or fundamental challenges of weak capacity that are inherent in fragile countries. A transformative approach to climate change (Strategy 2030, Operational Priority 3) should also be adopted, shifting the focus from projects that provide climate proofing to more strategic programs and approaches

40 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

that support adaptation and address the long-term impacts of sea-level rise and the forced migration of affected populations.

125. Recommendation 3: Measure and monitor the performance of ADB support to the PIC-12 at both the strategic and project levels and use evidence-based reporting to learn, adapt, and better demonstrate success and ADB value addition. This will involve (i) increasing the focus on improving the reliability and use of monitoring data, particularly in the rapidly evolving fragile country context; (ii) developing an integrated results framework for the next strategy, with clear links to the strategic goal/s, objectives, and outcomes and to regional and country priorities and activities, as well as to Strategy 2030 and its operational priorities; and (iii) reporting on performance against the strategy results framework in the COBPs and ROBP. Other development partners that have similarly struggled to understand and articulate the performance of their investments in the Pacific are now using innovative approaches to measure, monitor, and report on performance at the strategic and investment levels. ADB could use a similar approach to address this historical challenge. For example, the Government of Australia engages managing contractors (development consulting companies) to measure, monitor, and report on the performance of Australian support to some Pacific countries (at the strategic and project levels) and provide capacity building and training to counterparts. 126. Recommendation 4: Work more closely with other development partners to support stronger aid coordination in counterpart governments and improve absorptive capacity in the Pacific. Providing more support jointly with traditional and emerging development partners will improve absorptive capacity and reduce the burden on small governments that often engage separately with multiple development partners concurrently. 127. Recommendation 5: Build Pacific Department capacity to deliver and manage the larger work program.

(i) ADB could employ more international staff from Pacific countries, as only eight of the current 1,287 international staff are from a Pacific country (0.62%). While this is a reasonable representation of Pacific countries based on financial membership, the tacit knowledge that comes from employing people from the Pacific would improve ADB’s ability to use a differentiated approach, which is key to successfully working in an FCAS environment.

(ii) Pacific Country Office staff could be more involved in the planning and implementation of country programs and projects; and in monitoring, reporting, and assessing achievements at the country level, and contributing to regional and overall strategic objectives, not just at the project level.

(iii) FCAS-focused training for PARD staff should include topics such as: how to engage in meaningful policy dialogue with governments; how to design and implement projects in limited-capacity and high natural disaster contexts; and how to systematically assess capacity and design long-term programs to strengthen individual, organizational, broader sectoral and institutional capacity.

Appendixes

APPENDIX 1: LINKED DOCUMENT Pacific Approach, 2016–2020: Country Partnership Strategy Final Review https://www.adb.org/sites/default/files/linked-documents/Pacific-Approach-CPSFR-2016-2020.pdf

APPENDIX 2: COVID-19 IN THE PACIFIC 1. This section of the report discusses the early impact of the coronavirus disease (COVID-19) on the Pacific and the relevance of the Pacific Approach, 2016–2020 to address the COVID-19 context after years of implementing projects related to the strategic priority of risk management.1 Chapter 3, Section C offers recommendations for developing the next strategy in the context of this unprecedented catastrophe. 2. COVID-19 context. The twin health and economic crises caused by the COVID-19 pandemic have the potential to devastate the Pacific people and economies. As of 3 October 2020, nine of the PIC-11 were yet to report a case: The Federated States of Micronesia, Kiribati, Nauru, Palau, Republic of the Marshall Islands (RMI) Samoa, Tonga, Tuvalu, and Vanuatu. Papua New Guinea, Fiji, and the Solomon Islands have all confirmed cases of COVID-19 (see Table A2). Pacific countries were among some of the first in the world to recognize the likely impacts of COVID-19 and most were quick to close their borders, restrict domestic movement, and impose states of emergency. While these government measures were indisputably essential, they have imposed significant costs on their people and economies.

Table A2: Confirmed Cases of COVID-19 in Pacific Developing Member Countries (as of 6 October 2020)

Location Confirmed Cases Deaths Recoveries

Papua New Guinea 592 7 580

Fiji 34 2 31

Solomon Islands 2 0 0 Sources: Papua New Guinea. Joint Agency Task Force National Control Centre for COVID-19 Update dated 3 November 2020. Port Moresby; Fiji Ministry for Health and Medical Services. COVID-19 Update dated 30th October 2020. Suva; World Health Organisation Western Pacific Office. COVID-19 Joint Incident Management Team Health Sector Preparedness & Response update dated 14 October 2020. Manila.

3. Most of the PIC-11 economies are highly vulnerable and dependent on major trading partners, such as Australia and New Zealand, and closed borders means that the economic losses are likely to be severe.2 Fiji, Samoa, and Vanuatu, for instance, are heavily dependent on these two economies for tourism and remittances. Fiji's economy “could even go into a depression”, while the World Bank has warned that the economic outlook for Pacific island countries this year “is subject to substantial risks due to their economies' reliance on grants and tourism.”3 Tourism contributes nearly 40% to Fiji’s gross domestic product (GDP)—about $884 million (FJ$2 billion), and directly or indirectly employs over 150,000 people in various industries.4 Last year, 894,000 tourists visited Fiji, which is more than the number of residents living in the country (roughly 880,000). Most tourists come from Australia (41%) and New Zealand (23%). In addition to job losses caused by domestic lockdowns, the Pacific economies are expected to be heavily hit by the likely reductions in commercial fishing because of travel restrictions, and a falling global oil price.

1 The validation was undertaken in the midst of the COVID-19 global outbreak. Pacific countries were among some of the first in

the world to recognize the likely impacts of COVID-19 and many closed their borders during the mission. Despite challenges, the validation was not significantly impacted by the pandemic as the majority of the missions and the desk review were conducted prior to most Pacific countries closing their borders. Where necessary, interviews with counterparts and stakeholders were conducted remotely using Skype for Business. Owing to the closure of ADB headquarters in Manila in March 2020, the validation was prepared while working remotely.

2 Fiji, Samoa, and Vanuatu, for instance, are heavily dependent on these two economies for tourism and remittances. 3 N. Whiting. 26 April 2020. ABC News. Is the Pacific evading coronavirus, or is it running a few weeks behind Australia on the

infection curve? Canberra. Accessed on 26 April 2020 at https://www.abc.net.au/news/2020-04-26/is-the-pacific-a-few-weeks-behind-australia-on-covid-19/12174024 .

4 S. Chanel. 16 Apr 2020. 'It's catastrophic': Fiji's colossal tourism sector devastated by coronavirus. The Guardian. Accessed on 26 April 2020 at https://www.theguardian.com/world/2020/apr/16/its-catastrophic-fijis-colossal-tourism-sector-devastated-by-coronavirus.

44 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

4. Stimulus packages. Most of the PIC-11 have adopted stimulus packages to address the economic loss created by COVID-19. While the packages vary from one country to the next, they generally include a mix of government, banking, superannuation, and monetary policy reforms.5 For example, some commercial banks have suspended principal repayments of loans from their customers for up to six months and central banks (where they exist) have relaxed monetary policy to support growth. While these measures are necessary to protect livelihoods, it is less clear whether the stimulus packages will work, and whether they will be sustainable if the pandemic is prolonged. It is also not yet clear whether governments have the necessary fiscal space to finance their stimulus packages. Some PICs already face high debt levels and taking more debt in the immediate future may result in high risk debt-distressed countries, such as Samoa and Tonga, having to restructure expenditure and seek more grant financing from development partners.6 Accessing additional financing will be difficult for some, as debt sustainability assessments may limit the finance available for stimulus packages. While the stimulus packages provide a sound short-term solution, a prolonged pandemic is likely to create high debt burdens, which will translate into weak growth prospects and result in catastrophic socioeconomic consequences for people and economies. 5. Pacific health systems. Pacific countries are also highly vulnerable to infectious diseases, even without COVID-19. Healthcare systems in the PIC-11 suffer from a lack of resources, health professionals, basic equipment, and infrastructure.7 This is magnified by the, poor logistics, transport infrastructure, and geographical isolation challenges in providing health services in remote regions. Inadequate water, sanitation and hygiene infrastructure, and limited fresh water supplies in remote communities may also impede basic containment measures (footnote 7). 6. Concurrent disasters. Many Pacific countries are dealing with multiple crises concurrently. The Pacific remains prone to natural hazards and extreme weather events. Evidencing this, Tropical Cyclone Harold hit Vanuatu, the Solomon Islands, Fiji, and Tonga in April 2020. Cyclone Harold was a category 5 intensity when it damaged up to 90% of homes in Luanville, on the island of Espiritu Santo in Vanuatu, rendering 5,000 people homeless.8 In addition, there are active measles outbreaks in multiple Pacific countries at present, including Samoa, Tonga, Fiji, Kiribati, and American Samoa.9 7. Relevance of the Pacific Approach, 2016-2020 to addressing COVID-19. Overall, this validation assesses the ADB-supported investments in the managing risks strategic priority both relevant and effective. The Pacific Approach, 2016–2020 highlighted the need to increase disaster resilience and to build fiscal buffers. In the relevance and effectiveness sections, the country partnership strategy final review (CPSFR) stated that projects have (i) built government and community capacity in disaster risk management (DRM); (ii) directly responded to the impacts of natural disasters; (iii) supported reforms to increase fiscal resilience and build economic buffers; (iv) addressed cross-border health security issues; and (v) strengthened public sector management capacities to increase fiscal resilience. 8. ADB support to improve disaster resilience. A project completion report (PCR) for a cyclone recovery project in Tonga after Cyclone Ian rated the project highly relevant and highly effective. The project delivered outputs ahead of schedule, enabling rehabilitated services and facilities to be used much earlier than expected, while also providing additional deliverables that allowed some important public services to resume under better conditions, including an upgraded public market. The PCR for the

5 O. Tevi. 23 April 2020. The Pacific’s economic response to COVID-19: will it be sustainable? Devpolicy Blog. Canberra. Accessed

23 April 2020. https://devpolicy.org/the-pacifics-economic-response-to-covid-19-will-it-be-sustainable-20200423-1/. 6 O. Tevi. 23 April 2020. The Pacific’s economic response to COVID-19: will it be sustainable? Devpolicy Blog. Canberra. Accessed

23 April 2020. https://devpolicy.org/the-pacifics-economic-response-to-covid-19-will-it-be-sustainable-20200423-1/. 7 P. Conroy. 20 April 2020. Australia needs a comprehensive plan for Covid-19 in the Pacific. The Lowy Institute. Sydney. Accessed

23 April 2020. https://www.lowyinstitute.org/the-interpreter/australia-needs-comprehensive-plan-covid-19-pacific. 8 ABC News. Satellite images reveal Cyclone Harold's path of destruction in Vanuatu. Canberra. Accessed 23 April 2020.

https://www.abc.net.au/news/2020-04-11/satellite-images-reveal-cyclone-harolds-path-of-destruction/12142366 9 DFAT. 23 April 2020. Smart Traveler: Pacific measles outbreak. Canberra. Accessed 23 April 2020.

https://www.smartraveller.gov.au/news-and-updates/pacific-measles-outbreak.

Appendix 2: Covid-19 in the pacific 45

Solomon Islands Transport Sector Flood Recovery Project rated it effective and efficient. The project helped to generate savings in travel time by 5% and to restore economic activity to pre-flood levels. While travel costs have increased slightly, people now have access to better quality public transport. New and ongoing projects include disaster resilience programs in Cook Islands and Palau, and a regional disaster resilience program covering RMI, FSM, Samoa, Solomon Islands, Tonga, and Tuvalu, which supports policy actions in DRM and provides countries with a source of contingent financing for timely disaster response, early recovery, and reconstruction activities. In RMI, the Third Drought Disaster Response Project targeted drought relief to affected areas. Cyclone rehabilitation assistance was provided in Vanuatu after Cyclone Pam (mostly road infrastructure rehabilitation) and in Tonga after Cyclone Gita (immediate relief assistance followed by a larger project to restore electricity supplies). Cyclone rehabilitation projects in Vanuatu and Tonga are also preliminarily assessed as effective based on progress reports and in-country discussions by the validation team. The CPSFR did not provide information to verify the claim that ADB support is addressing cross-border health security issues. Projects supporting cross-border health security issues comprise the Systems Strengthening for Effective Coverage of New Vaccines in the Pacific Project (Samoa, Tonga, Tuvalu, and Vanuatu), which is receiving ADB’s Health Security financing; and the e-health project in Tonga, which is expected to provide data and capacity to identify, monitor, and treat communicable disease outbreaks. 9. ADB support to build fiscal buffers. ADB-financed support includes the following:

(i) In Kiribati, the Strengthening Economic Management Reform Program adopted a programmatic approach, building on current government-led reforms supported by a multi-partner policy action matrix and providing a stable macroeconomic framework.

(ii) In RMI, the Public Financial Management Project is addressing the low institutional capacity of the Ministry of Finance to implement public financial management (PFM) and state-owned enterprises (SOE) reforms.

(iii) In the Solomon Islands, the Improved Fiscal Sustainability Reform Program builds on previous policy-based programs and technical assistance (TA) to further improve PFM and fiscal sustainability, but also addresses the private sector investment climate.

(iv) In Tonga, the Building Macroeconomic Resilience Program is a multiyear budget support program consisting of three subprograms aimed at strengthening Tonga’s long-term growth prospects and capacity to respond to external shocks. It supports government efforts to improve (i) its fiscal position by adopting prudent policies and better PFM; and (ii) the business climate through continuing policy, regulatory, and public enterprise reforms.

(v) In Tuvalu, the Improved Fiscal and Infrastructure Management Program aims to strengthen fiscal sustainability by supporting priority policy actions under the government’s rolling multiyear policy reform matrix. It is a single-tranche stand-alone grant, supporting reforms to improve the management of public finance and national infrastructure.

(vi) In Samoa, the Fiscal Resilience Improvement Program was found to be less than successful overall because the second subprogram was not implemented.

10. Looking forward. As the COVID-19 pandemic intensifies, the need for international cooperation to deal with the twin health and economic crises is magnified. To assist the PIC-11 economies, debt repayments could be postponed until these economies recover. The G-20’s Debt Service Suspension Initiative will assist some low-income countries, such as the Solomon Islands. ADB could play a valuable role in advocating for the postponement of debt repayments by the PIC-11 to non-traditional bilateral development lenders. The main challenges will be to contain the spread of COVID-19, manage the health emergency, and reopen domestic economic activity and international borders again so that commerce can resume. Signs are emerging in two of the leading trading partners for the PIC-11 (Australia and New Zealand) that the spread of COVID-19 is easing as a result of lockdown measures. While a complete reopening of PIC-11 borders is not likely in the short term, a partial reopening of borders to trading partners that are successfully containing the spread of the virus might be possible in the medium term. This approach could be encouraged by ADB in high-level discussions with relevant member countries.

46 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

11. International experts advise that it is not appropriate to establish a 5-year ‘business as usual’ strategy at present. This means that ADB should be exploring options to develop country specific interim strategies of 18–24 months duration, outlining a goal and objectives to help developing member countries (DMCs) overcome the human and economic challenges associated with COVID-19. McKinsey encourages thinking and action across the following five horizons:10 (i) Resolve: address the immediate challenges that COVID-19 represents to ADB, DMCs, and development partners; (ii) Resilience: address near-term fiscal challenges and broader resiliency issues, and their economic knock-on effects; (iii) Return: create a detailed plan to support DMCs to enable ADB to return to scale quickly, as the virus evolves and knock-on effects become clearer; (iv) Re-imagine: re-imagine the “next normal” – what a discontinuous shift looks like, and implications for how ADB could work more successfully in the Pacific; and (v) Reform: be clear about how the development context in the PIC-11 may change.11 Strategy across these five areas requires a One-ADB approach. 12. ADB needs to draw on its strengths and comparative advantages to promote social and economic development in the PIC-11. ADB is well placed to maximize the development impact of its assistance by facilitating policy dialogues (conducted remotely), providing advisory services, and mobilizing financial resources through cofinancing operations. ADB support for and approach to DRM and disaster response remain important, as the PIC-11 will likely continue to grapple with natural disasters throughout the COVID-19 pandemic. Their ongoing resilience and recovery from frequent and extreme natural disasters will place them in good stead, by enabling them to draw on established DRM mechanisms and existing experience. 13. ADB has limited recognized comparative advantage in the PIC-11 in providing support to the health or agriculture sectors (e.g., to address food shortages), as compared to other long-term development partners. ADB’s contribution in these sectors was relatively minimal over the Pacific Approach, 2016–2020. Evidencing this, by 31 December 2019, the health sector comprised only 2.6% of the portfolio with operations amounting to $33.1 million, and agriculture and natural resources and rural development (ANR) $25 million (2%). Ongoing support to the primary sectors at present (transport, information communication technology [ICT], and renewable energy) is not likely to be prioritized by the PIC-11 in the short- to medium-term while they grapple concurrently with extreme financial and social challenges associated with addressing a health emergency, food security issues, diminished trade, and economic losses.

10 The five horizons have been adapted to the ADB context. 11 McKinsey and Company, 3 April 2020. COVID-19: Briefing materials – Global Health and Crisis Response.

APPENDIX 3: REGIONAL OPERATIONS BUSINESS PLANS FOR 2016–2020 1. The Regional Operations Business Plan (ROBP), 2016–2018 was prepared at the same time as the Pacific Approach, 2016–2020. The proposed lending program for 2016–2018 totaled $125 million. In the ROBP’s indicative program, public sector management (PSM) was to be provided about two-fifths of the resource envelope, with an allocation of $47 million (38% of the total envelope). Education was allocated another third, at $37 million (30%), ANR $20 million (16%), ICT $12 million (9%), transport $5 million (4%), finance and industry $2 million (1%), water and urban infrastructure and other services (WUS) $1 million (1%), and energy $1 million (1%). 2. The Pacific ROBP was prepared in 2018 for the period 2019–2021. Regional cooperation and integration (RCI) commitments are expected to grow to $953.1 million during 2019–2021: $519.1 million in ADB financing, $392.0 million in cofinancing, and $42.0 million in national counterpart contributions. The ADB-funded ROBP pipeline is 22% of the total Pacific pipeline for 2019–2021, as set out in individual country operations business plans. The regional nonlending program is expected to total $40.6 million during 2019–2021, with $17.4 million in ADB TA commitments expected to leverage $23.2 million in cofinancing. In the indicative program, the transport sector was to be provided the lion’s share of the resource envelope, with an allocation of $452 million (87% of the total envelope). PSM was allocated $29 million (6%), finance and industry $20 million (4%), health $8 million (1%), ICT $6 million (1%), and energy $5 million (1%) (see Figure A3 below). Cofinancing (pipeline and actual) grew significantly over the period with a significant proportion from the Green Climate Fund to support energy and WUS projects. 3. The CPSFR did not examine performance against the Pacific ROBPs. Thus, it is unclear why the regional allocations to sectors changed so dramatically (e.g., energy and transport).

48 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

Figure A3: Pacific Region, 2016–2020: Indicative Resource Envelope ($ million)

ANR = agriculture, natural resources, and rural development, EDU = education, ENE = energy, FIN = finance, HLT = health, ICT = information and communication technology, IND = industry and trade, PSM = public sector management; ROBP = regional operations business plan; TRA = transport; WUS = water and other urban infrastructure and services. Sources: ADB. 2015. Regional Operations Business Plan: Pacific, 2016–2018. Manila; ADB. 2016. Regional Operations Business Plan: Pacific, 2017–2019. Manila; ADB. 2017. Regional Operations Business Plan: Pacific, 2018–2020. Manila; ADB. 2018. Regional Operations Business Plan: Pacific, 2019–2021. Manila.

APPENDIX 4: OVERALL LOANS AND GRANTS APPROVED, ONGOING AND COMPLETED DURING 2016–2019, BY SECTOR

Sector Sovereign Options

Number of

Projects Total ADB Approved

Amount (US$) Agriculture, Natural Resources and Rural Development 1 50,000,000 Approved Before CPS Period but Ongoing and/ or Completed During CPS Period 1 50,000,000 Education 2 32,000,000 Approved Before CPS Period but Ongoing and/ or Completed During CPS Period 1 3,600,000 Approved During CPS Period 2 28,400,000 Energy 18 226,840,000 Approved Before CPS Period but Ongoing and/ or Completed During CPS Period 8 102,400,000 Approved During CPS Period 10 124,440,000 Health 6 34,500,000 Approved Before CPS Period but Ongoing and/ or Completed During CPS Period 2 1,200,000 Approved During CPS Period 4 33,300,000 Information and Communication Technology 7 135,200,000 Approved Before CPS Period but Ongoing and/ or Completed During CPS Period 5 83,600,000 Approved During CPS Period 2 51,600,000 Public Sector Management 20 122,500,000 Approved Before CPS Period but Ongoing and/ or Completed During CPS Period 2 300,000 Approved During CPS Period 18 122,200,000 Transport 16 273,600,000 Approved Before CPS Period but Ongoing and/ or Completed During CPS Period 9 111,180,000 Approved During CPS Period 7 162,480,000 Water and other Urban Infrastructure Service 13 155,495,000 Approved Before CPS Period but Ongoing and/ or Completed During CPS Period 5 66,420,000 Approved During CPS Period 8 89,075,000 Subtotal (Sovereign) 84 985,195,000 Approved Before CPS Period but Ongoing and/ or Completed During CPS Period 33 373,700,000 Approved During CPS Period 51 611,495,000 Nonsovereign Operations

Energy 2 102,000,000 Approved Before CPS Period but Ongoing and/ or Completed During CPS Period 0 0 Approved During CPS Period 2 102,000,000

Subtotal (Nonsovereign) 2 102,000,000 Approved Before CPS Period but Ongoing and/ or Completed During CPS Period 0 0 Approved During CPS Period 2 102,000,000

TOTAL (Country Portfolio) 86 1,087,195,000 Approved Before CPS Period but Ongoing and/ or Completed During CPS Period 33 373,700,000 Approved During CPS Period 53 713,495,000

ADB = Asian Development Bank; CPS = country partnership strategy. a Includes approved projects during the CPS period, and those approved before the CPS period but are ongoing and completed during the CPS period. Additional financing projects approved during the CPS period, and where the original project was approved before the CPS period, are counted as one project.

Sources: Controller’s Department database as of 31 December 2019; ADB eOperations database and ADB's project website, as of 31 January 2020.

APPENDIX 5: OVERALL PORTFOLIO FOR PACIFIC DURING THE COUNTRY PARTNESRHIP STRATEGY FINAL REVIEW VALIDATION, 2016–2019

Table A5.1: List of Sovereign Loans and Grants Approved, Ongoing, and Completed in 2016–2019

Project Number

Project Count

Country Project Name Approval Number

Approval Date

Closing Date

Total ADB Approved Amount (US$)

PCR | PVR Rating

Lending Modality

Source of

Funds

Agriculture, Natural Resources, and Rural Development Approved Before CPS Period

46436-002 1 SAM Samoa AgriBusiness Support Project GR0392 17-Jun-14 31-Jan-22 5,000,000.00

Project COL Subtotal (1) 5,000,000 Sector Total (1) 5,000,000.00

Education Approved Before CPS Period

42291-025 2 REG | KIR

Higher Education in the Pacific Investment Program - Tranche 1

L2870 | L3128

15-Jun-12 16-Nov-17 3,600,000.00 S, S MFF Project

COL

Subtotal (1) 3,600,000.00 Approved During CPS Period

42291-026 3 REG | SOL

Higher Education in the Pacific Investment Program - Tranche 2

L3445 21-Oct-16 30-Jun-20 15,400,000.00

MFF Project

COL

49456-002 4 RMI Improving the Quality of Basic Education in the North Pacific

G0536 03-Jul-17 31-Jan-24 6,500,000.00

Project COL FSM G0535 03-Jul-17 31-Jan-24 6,500,000.00

COL

Subtotal (2) 28,400,000.00 Sector Total (3) 32,000,000.00

Energy Approved Before CPS Period

38183-013 5 SAM Power Sector Expansion Project G0087 | L2368

21-Nov-07 28-Dec-18 42,000,000.00 S Sector COL

44469-013 6 FSM Yap Renewable Energy Development Project

L3004 | L3005

20-Jun-13 31-Dec-18 9,040,000.00 S Project COL | OCR

43452-022 7 TON Outer Island Renewable Energy Project

G0347 | G0444

27-Jun-13 30-Jun-20 3,440,000.00

Project COL

46044-002 8 SAM Renewable Energy Development and Power Sector Rehabilitation Project

G0370 | G0373

15-Nov-13 29-Feb-20 18,210,000.00

Project COL

46014-002 9 SOL Provincial Renewable Energy Project G0386 | L3127

12-May-14

15-Oct-18 12,000,000.00 U, U Project COL

48192-001 10 TON Cyclone Ian Recovery Project G0389 16-May-14

18-Oct-19 4,520,000.00 HS Project COL

Appendix 5: Overall Portfolio for Pacific during the CPSFR Validation (2016–2019) 51

Project Number

Project Count

Country Project Name Approval Number

Approval Date

Closing Date

Total ADB Approved Amount (US$)

PCR | PVR Rating

Lending Modality

Source of

Funds

46455-002 11 NAU Electricity Supply Security and Sustainability

G0414 07-Nov-14 23-Oct-18 2,000,000.00 HS, S Project COL

46453-002 12 COO Renewable Energy Sector Project L3193 21-Nov-14 31-Dec-21 11,190,000.00

Project OCR Subtotal (8) 102,400,000.00

Approved During CPS Period

43452-022 (7) TON Outer Island Renewable Energy

Project L3509 | G0528

14-Dec-16 30-Jun-20 5,000,000.00

Project COL

43452-022 (7) TON Outer Island Renewable Energy Project- Additional Financing

G0586 31-Jul-18 30-Jun-21 5,500,000.00

Project COL

48346-002 13 SOL Solar Power Development Project G0514 21-Nov-16 30-Jun-21 2,240,000.00

Project COL 49450-008 14 VAN Energy Access Project G0543 |

L3572 26-Sep-17 31-Mar-24 5,000,000.00

Project COL

49450-007 15 RMI Majuro Power Network Strengthening Project

G0554 27-Nov-17 31-Jul-20 2,000,000.00

Project COL

52129-001 16 TON Cyclone Gita Recovery Project G0575 15-Jun-18 31-Dec-20 6,800,000.00

Project COL 49450-011 17 RMI Energy Security Project G0637 06-Dec-18 30-Jun-24 12,700,000.00

Project COL

49450-012 18 TON Renewable Energy Project G0640 11-Mar-19 30-Apr-23 12,200,000.00

Project COL 49450-009 19 NAU Solar Power Development Project G0664 18-Sep-19 28-Feb-24 22,000,000.00

Project COL

50240-001 20 SOL Tina River Hydropower Project G0665 | L3828

26-Sep-19 31-Dec-25 30,000,000.00

Project COL

49450-015 21 TUV Increasing Access to Renewable Energy Project

G0674 04-Nov-19 31-Dec-22 6,000,000.00

Project COL

49450-023 22 FSM Renewable Energy Development Project

G0680 22-Nov-19 31-Aug-23 15,000,000.00

Project COL

Subtotal (11) 124,440,000.00 Sector Total (19) 226,840,000.00

Health Approved Before CPS Period

47377-001 23 PAL Super Typhoon Haiyan Response Project

G0381 18-Dec-13 29-Jan-16 200,000.00

Project APDRF

49127-001 24 VAN Vanuatu Cyclone Pam Disaster Response Project

G0428 20-Mar-15 31-May-16

1,000,000.00

SAG APDRF

Subtotal (2) 1,200,000.00 Approved During CPS Period

51344-001 25 VAN Vanuatu Manaro Volcano Disaster Response Project

G0551 14-Nov-17 14-Sep-18 200,000.00

SAG APDRF

52242-001 26 VAN Second Manaro Volcano Disaster Response Project

G0608 20-Sep-18 27-Mar-19 500,000.00

SAG APDRF

52 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

Project Number

Project Count

Country Project Name Approval Number

Approval Date

Closing Date

Total ADB Approved Amount (US$)

PCR | PVR Rating

Lending Modality

Source of

Funds

50282-001 27 REG Systems Strengthening for Effective Coverage of New Vaccines in the Pacific Project

G0623| G0624| G0625| G0626| L3736

08-Nov-18 31-May-24

25,100,000.00

Project COL

50281-001 28 TON Introducing eGovernment through Digital Health

G0650 25-Jul-19 28-Feb-27 7,500,000.00

Project COL

Subtotal (4) 33,300,000.00 Sector Total (6) 34,500,000.00

Information and Communication Technology Approved Before CPS Period

36513-032 29 SAM Schoolnet and Community Access Project

G0097 14-Dec-07 26-Sep-16 5,900,000.00 S, LS Project COL

44172-022 30 TON Tonga-Fiji Submarine Cable Project G0256 23-Aug-11 25-Jun-18 9,700,000.00

Project COL 44382-022 31 SOL Broadband for Development Project L2897 25-Sep-12 29-Feb-16 10,500,000.00

Project COL

G0304 25-Sep-12 29-Feb-16 7,500,000.00

47320-001 32 SAM Samoa Submarine Cable Project G0458 23-Nov-15 30-Jun-21 25,000,000.00

Project COL 46382-001 33 PAL North Pacific Regional Connectivity

Investment Project L3346 | L3347

07-Dec-15 31-Dec-20 25,000,000.00

Project COL | OCR

Subtotal (5) 83,600,000.00 Approved During CPS Period

50110-001 34 COO Improving Internet Connectivity for the South Pacific Project

L3632 15-Dec-17 30-Sep-20 15,000,000.00

Project OCR

50348-001 35 NAU Improving Internet Connectivity for Micronesia Project (formerly Improving Internet Connectivity for FSM, Kiribati, and Nauru)

G0571 28-Mar-18 31-Dec-22 15,000,000.00

Project COL KIR G0570 28-Mar-18 31-Dec-22 21,600,000.00

Subtotal (2) 51,600,000.00 Sector Total (7) 135,200,000.00

Public Sector Management Approved Before CPS Period

47189-001 36 RMI Drought Disaster Response Project G0344 17-May-13

04-Feb-16 100,000.00

Project APDRF

47217-001 37 RMI Second Drought Disaster Response Project

G0351 17-Oct-13 26-Apr-16 200,000.00

Project APDRF

Subtotal (2) 300,000.00 Approved During CPS Period

48478-001 38 NAU Fiscal Sustainability Reform Program G0473 21-Mar-16 01-Dec-16 2,000,000.00 S, S Program COL

Appendix 5: Overall Portfolio for Pacific during the CPSFR Validation (2016–2019) 53

Project Number

Project Count

Country Project Name Approval Number

Approval Date

Closing Date

Total ADB Approved Amount (US$)

PCR | PVR Rating

Lending Modality

Source of

Funds

50166-001 39 RMI Third Drought Disaster Response Project

G0476 06-Apr-16 03-Sep-18 200,000.00

SAG APDRF

48479-001 40 SOL Economic Growth and Fiscal Reform Program

G0478 27-May-16

31-Mar-17 5,000,000.00 S, S Program COL

48361-001 41 TON Building Macroeconomic Resilience Program, Subprogram 1

G0479| L3393

30-May-16

30-Jun-16 6,000,000.00

Program COL

48361-002 42 TON Building Macroeconomic Resilience Program, Subprogram 2

G0532| L3531

29-May-17

11-Sep-17 5,000,000.00

Program COL

48361-003 43 TON Building Macroeconomic Resilience Program, Subprogram 3

G0647 05-Jun-19 30-Sep-19 5,000,000.00

Program COL

50212-001 44 COO Disaster Resilience Program L3479 02-Dec-16 30-Jun-20 10,000,000.00

Program OCR 50212-002 45 COO Disaster Resilience Program, Phase 2 L0001 03-Dec-19 30-Jun-23 10,000,000.00 Program OCR 50210-001 46 SAM Fiscal Resilience Improvement

Program, Subprogram 1 G0525 07-Dec-16 28-Jun-17 5,000,000.00 LS, LS Program COL

50295-001 47 RMI Public Financial Management Project

G0547 13-Oct-17 30-Jun-21 2,000,000.00

Project COL

50295-002 (47) RMI Public Financial Management Project (additional financing)

G0658 17-Sep-19 30-Jun-21 500,000.00

Project COL

47322-001 48 KIR Strengthening Economic Management Reform Program (Subprogram 1)

G0560 14-Dec-17 19-Feb-18 5,000,000.00

Program COL

47322-002 49 KIR Strengthening Economic Management Reform Program (Subprogram 2)

G0633 28-Nov-18 03-Apr-19 2,500,000.00

Program COL

50028-001 50 TON Pacific Disaster Resilience Program L3628| G0558

14-Dec-17 03-Aug-18 6,000,000.00

Program COL

SAM L3627| G0557

14-Dec-17 31-Dec-22 6,000,000.00

TUV G0559 14-Dec-17 31-Dec-22 3,000,000.00

50028-002 51 SOL Pacific Disaster Resilience Program (Phase 2)

L3830| G0667

27-Sep-19 31-Dec-22 6,000,000.00

Program COL

RMI G0666 27-Sep-19 31-Dec-22 6,000,000.00

TON G0668 27-Sep-19 31-Dec-22 6,000,000.00

FSM G0669 27-Sep-19 31-Dec-22 6,000,000.00

52075-001 52 TON Tropical Cyclone Gita Emergency Response Project

G0567 21-Feb-18 22-Aug-18 1,000,000.00

SAG APDRF

52018-001 53 PAL Disaster Resilience Program L3725 15-Oct-18 31-Dec-21 15,000,000.00

Program OCR

54 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

Project Number

Project Count

Country Project Name Approval Number

Approval Date

Closing Date

Total ADB Approved Amount (US$)

PCR | PVR Rating

Lending Modality

Source of

Funds

52074-001 54 SOL Improved Fiscal Sustainability Reform Program

G0629 26-Nov-18 12-Feb-19 5,000,000.00

Program COL

50377-001 55 TUV Improved Fiscal and Infrastructure Management Program

G0673 30-Oct-19 04-Dec-19 4,000,000.00

Program COL

Subtotal (18) 122,200,000.00 Sector Total (20) 122,500,000.00

Transport Approved Before CPS Period

40263-022 56 SOL Domestic Maritime Support (Sector) Project

G0127 25-Nov-08 30-Jun-19 18,650,000.00

Project COL

44281-013 57 KIR Road Rehabilitation Project L2718 | G0470

10-Dec-10 31-May-17

14,400,000.00 S, S Project COL

41171-022 58 SOL Transport Sector Development Project

G0243 15-Dec-10 19-Jul-17 12,000,000.00 S, LS Project COL

42392-013 59 VAN Interisland Shipping Support Project L2820| L3249

30-Nov-11 31-Dec-19 29,300,000.00

Project COL

42391-013 60 VAN Port Vila Urban Development Project L2832 13-Dec-11 31-Dec-18 5,000,000.00

Project COL 48293-001 61 SOL Transport Sector Flood Recovery

Project G0403| L3152

13-Aug-14 30-Sep-18 13,220,000.00 S Sector COL

48484-003 62 TUV Outer Island Maritime Infrastructure Project - PDA

G6003 16-Nov-15 30-Jun-19 2,000,000.00

Project COL

49319-001 63 VAN Cyclone Pam Road Reconstruction Project

G0459| G0460| L3331| L3332

25-Nov-15 31-May-20

13,610,000.00

Project COL

48480-002 64 NAU Port Development Project - PDA G6005 16-Dec-15 31-Dec-20 3,000,000.00

Project COL Subtotal (9)

111,180,000.00

Approved During CPS Period

46499-002 65 SOL Sustainable Transport Infrastructure

Improvement Program L3392 27-May-

16 30-Jun-21 21,000,000.00

RBL COL

48484-002 66 TUV Outer Island Maritime Infrastructure Project

G0511| G0512

16-Nov-16 30-Jun-21 11,300,000.00

Project COL

44281-013 (57) KIR Road Rehabilitation Project (Additional Financing)

G0527 12-Dec-16 11-Jun-18 9,000,000.00 S, S Project COL

49319-001 (63) VAN Cyclone Pam Road Reconstruction Project

G0540| L3552

09-Aug-17 31-May-20

8,200,000.00

Project COL

Appendix 5: Overall Portfolio for Pacific during the CPSFR Validation (2016–2019) 55

Project Number

Project Count

Country Project Name Approval Number

Approval Date

Closing Date

Total ADB Approved Amount (US$)

PCR | PVR Rating

Lending Modality

Source of

Funds

48480-003 67 NAU Sustainable and Climate-Resilient Connectivity Project (formerly Port Development Project)

G0564 25-Jan-18 30-Jun-23 21,300,000.00

Project COL

47358-002 68 SAM Enhancing Safety, Security, and Sustainability of Apia Port Project (PDA)

G6013 26-Apr-18 31-Dec-20 3,000,000.00

Project COL

Enhancing Safety, Security, and Sustainability of Apia Port Project

G0654 09-Sep-19 31-Mar-24 62,260,000.00

51214-001 69 SOL Transport Sector Project Development Facility

G0609 12-Sep-18 30-Jun-22 6,000,000.00

Project COL

48484-004 70 TUV Outer Island Maritime Infrastructure Project (Additional financing)

G0603 13-Sep-18 30-Jun-22 15,420,000.00

Project COL

53045-001 71 TON Transport Project Development Facility (PRF)

G6018 18-Jun-19 30-Jun-23 5,000,000.00

Project COL

Subtotal (7) 162,480,000.00 Sector Total (16) 273,660,000.00

Water and Other Urban Infrastructure Services Approved Before CPS Period

35448-013 72 FSM Omnibus Infrastructure Development

L2099 | L2100

05-Nov-04 30-Apr-20 19,000,000.00

Project COL | OCR

42394-022 73 TON Nuku'alofa Urban Development Sector Project

G0264 17-Oct-11 30-Sep-19 6,060,000.00

Project COL

43072-013 74 KIR South Tarawa Sanitation Improvement Sector Project (formerly Tarawa Sanitation Improvement Project)

L2795 17-Oct-11 31-Dec-19 7,560,000.00

Project COL

42439-013 75 PAL Koror-Airai Sanitation Project L3060| L3061

19-Nov-13 31-Aug-22 28,800,000.00

Project COL | OCR

46346-002 76 RMI Ebeye Water Supply and Sanitation Project

G0438 28-Sep-15 30-Jun-22 5,000,000.00

Project COL

Subtotal (5) 66,420,000.00 Approved During CPS Period

43072-013 (74) KIR South Tarawa Sanitation Improvement Sector Project (formerly Tarawa Sanitation Improvement Project)

G0502 17-Oct-16 31-Dec-19 2,800,000.00

Project COL

49453-003 77 KIR South Tarawa Water Supply Project - PDA

G6012 24-Nov-17 31-Oct-20 2,000,000.00

Project COL

56 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

Project Number

Project Count

Country Project Name Approval Number

Approval Date

Closing Date

Total ADB Approved Amount (US$)

PCR | PVR Rating

Lending Modality

Source of

Funds

51271-002 78 SOL Preparing the Urban Water Supply and Sanitation Sector Project (PRF)

G6014 12-Dec-18 30-Jun-21 3,000,000.00

Project COL

49455-002 79 TON Integrated Urban Resilience Sector Project

G0651 28-Aug-19 31-Mar-26 18,275,000.00

Project COL

49453-002 80 KIR South Tarawa Water Supply Project (formerly South Tarawa Water Sector Improvement Program)

G0652 30-Aug-19 31-Dec-27 13,000,000.00

Project COL

51271-001 81 SOL Urban Water Supply and Sanitation Sector Project

G0662| L3826

25-Sep-19 31-Dec-27 37,000,000.00

Sector COL

51335-002 82 VAN Luganville Urban Water Supply and Sanitation Project (PRF)

G6025 26-Nov-19 31-Mar-23 3,000,000.00

Project COL

53284-001

83 FSM Preparing the Chuuk Water Supply and Sanitation Project (PRF)

G6026 10-Dec-19

30-Jun-23

5,000,000.00 Project COL

53351-001 84 RMI Preparing Urban Service Improvement Projects (PRF)

G6028 19-Dec-19 31-Jul-23 5,000,000.00 Project COL

Subtotal (8) 89,075,000.00 Sector Total (13) 155,495,000.00 Total approved before CPS period (33) 373,700,000.00 Total approved during CPS period (51) 611,495,000.00 TOTAL (83)

985,195,000.00

ADB = Asian Development Bank; APDRF = Asia Pacific Disaster Response Fund; COL = concessionary ordinary capita resources lending; COO = Cook Islands; CPS = country partnership strategy; FSM = Federated States of Micronesia; HS = highly successful; KIR = Kiribati; LS = less than successful; RMI = Marshall Islands; MFF = multitranche financing facility; NAU = Nauru; OCR = ordinary capital resources; PAL = Palau; PDA = project design advance; PCR = project completion report; PRF = project readiness financing; PVR = project completion report validation report; REG = regional; S = successful; SAG = special assistance grant; SAM = Samoa; SOL = Solomon Islands; TON = Tonga; TUV = Tuvalu; U = unsuccessful; VAN = Vanuatu. Sources: Controller’s Department database as of 31 December 2019; ADB eOperations database and ADB's project website, as of 31 January 2020.

Appendix 5: Overall Portfolio for Pacific during the CPSFR Validation (2016–2019) 57

Table A5.2: List of Cofinanced Loans and Grants Approved, Ongoing and Completed, 2016–2019

Project Number

Project Count

Country Project Name Approval Number

Approval Date

Closing Date

Total ADB Approved Amount

(US$)

Lending Modality

Source of Funds

Agriculture, Natural Resources, and Rural Development

Approved Before CPS Period

46351-002 1 TON Climate Resilience Sector Project G0378 09-Dec-13 30-Nov-19 19,250,000.00 Project STCF Subtotal (1)

19,250,000.00

Approved During CPS Period

46436-002 2 SAM Samoa AgriBusiness Support Project-Additional Financing

G0539 18-Jul-17 31-Jan-22 750,000.00 Project ASTAG

Subtotal (1)

750,000.00 Sector Total (2)

20,000,000.00

Education

Approved Before CPS Period

49320-001 3 VAN Cyclone Pam School Reconstruction Project G9181 16-Nov-15 30-Jun-20 5,000,000.00 Project JFPR

Subtotal (1)

5,000,000.00

Approved During CPS Period

42291-026 4 REG | SOL

Higher Education in the Pacific Investment Program - Tranche 2

G0505 21-Oct-16 30-Jun-20 1,500,000.00 Project CEF

49456-002 5 FSM Improving the Quality of Basic Education in the North Pacific

G0537 03-Jul-17 31-Jan-24 1,800,000.00 Project AUSG

Subtotal (2)

3,300,000.00 Sector Total (3)

8,300,000.00

Energy

Approved Before CPS Period

38183-013 6 SAM Power Sector Expansion Project L8232| G0101

04-Oct-07 28-Dec-18 46,000,000.00 Sector JBIC| AUSG

43452-022 7 TON Outer Island Renewable Energy Project G0446| G0445| G0348

27-Jun-13 30-Jun-20 8,820,000.00 Project DIDA| EU| AUSG

46044-002 8 SAM Renewable Energy Development and Power Sector Rehabilitation Project

G0457| G0456| G0371

15-Nov-13 29-Feb-20 8,550,000.00 Project NZG| EU| CEF

46453-002 9 COO Renewable Energy Sector Project G0415 | 21-Nov-14 31-Dec-21 7,260,000.00 Project EU

46455-002 10 NAU Electricity Supply Security and Sustainability G0443| G0424

07-Nov-14 23-Oct-18 7,436,000.00 Project AUSG| ESSSN

48192-001 11 TON Cyclone Ian Recovery Project G0390 16-May-14 18-Oct-19 4,266,000.00 Project NZG

58 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

Project Number

Project Count

Country Project Name Approval Number

Approval Date

Closing Date

Total ADB Approved Amount

(US$)

Lending Modality

Source of Funds

Subtotal (6)

82,332,000.00

Approved During CPS Period

43452-022 (7) TON Outer Island Renewable Energy Project- Additional Financing

G0588| G0587

31-Jul-18 30-Jun-21 3,379,269.00 Project AUSG| GEF

46453-002 (9) COO Renewable Energy Sector Project - Additional Financing

G0548| G0493

29-Aug-16 31-Dec-21 16,264,654.00 Project GCF| GEF

48346-002 12 SOL Solar Power Development Project G0515 21-Nov-16 30-Jun-21 6,200,000.00 Project STCF

49450-008 13 VAN Energy Access Project G0544 26-Sep-17 31-Mar-24 7,000,000.00 Project STCF

49450-012 14 TON Renewable Energy Project G0642| G0641

11-Mar-19 30-Apr-23 32,400,000.00 Project AUSG| GCF

50240-001 15 SOL Tina River Hydropower Project Grant| Loan

26-Sep-19 31-Jul-23 175,500,000.00 Project GCF| WB| Korea Exim Bank| Abu

Dhabi Fund| AUSG

Subtotal (4)

240,743,923.00

Sector Total (10)

323,075,923.00

Health

Approved Before CPS Period

43090-012 16 REG| COO| RMI| TON

Regional: Social Protection of the Vulnerable in the Pacific (Cook Islands, RMI, and Tonga)

G9151 13-Sep-10 29-Jan-18 3,000,000.00 Project JFPR

Subtotal (1)

3,000,000.00 Sector Total (1)

3,000,000.00

Information and Communication Technology

Approved Before CPS Period

44172-022 17 TON Tonga-Fiji Submarine Cable Project Grant 23-Aug-11 25-Jun-18 16,500,000.00 Project WB

47320-001 18 SAM Samoa Submarine Cable Project Grant 23-Nov-15 31-May-17 17,500,000.00 Project WB| AUSG

Subtotal (2)

34,000,000.00

Approved During CPS Period

50110-001 19 COO Improving Internet Connectivity for the South Pacific Project

Grant 15-Dec-17 30-Sep-20 10,000,000.00 Project NZG

50348-001 20 NAU| FSM|

Improving Internet Connectivity for Micronesia Project (formerly Improving

Grant 28-Mar-18 26-Nov-21 36,200,000.00 Project WB

Appendix 5: Overall Portfolio for Pacific during the CPSFR Validation (2016–2019) 59

Project Number

Project Count

Country Project Name Approval Number

Approval Date

Closing Date

Total ADB Approved Amount

(US$)

Lending Modality

Source of Funds

KIR| REG

Internet Connectivity for FSM, Kiribati, and Nauru)

Subtotal (2)

46,200,000.00 Sector Total (4)

80,200,000.00

Public Sector Management

Approved During CPS Period

47322-001 21 KIR Strengthening Economic Management Reform Program (Subprogram 1)

Grant 14-Dec-17 19-Feb-18 7,400,000.00 Program WB| AUSG| NZG

47322-002 22 KIR Strengthening Economic Management Reform Program (Subprogram 2)

Grant 28-Nov-18 03-Apr-19 7,360,000.00 Program WB| AUSG| NZG

48361-001 23 TON Building Macroeconomic Resilience Subprogram 1

Grant| Loan

30-May-16 30-Jun-16 7,800,000.00 Program EU| WB| AUSG

48361-002 24 TON Building Macroeconomic Resilience Program (Subprogram 2)

Grant| Loan

29-May-17 11-Sep-17 11,300,000.00 Program WB| AUSG| NZG| EU

48361-003 25 TON Building Macroeconomic Resilience Program, Subprogram 3

Grant 05-Jun-19 03-Oct-19 10,500,000.00 Program EU| WB| AUSG

48478-001 26 NAU Fiscal Sustainability Reform Program G0474 28-Apr-16 01-Dec-16 1,886,000.00 Program AUSG

50210-001 27 SAM Fiscal Resilience Improvement Program, Subprogram 1

Grant| Loan

07-Dec-16 28-Jun-17 15,900,000.00 Program WB| AUSG| NZG| EU

50377-001 28 TUV Improved Fiscal and Infrastructure Management Program

Grant 30-Oct-19 04-Dec-19 10,600,000.00 Program WB| AUSG| NZG| EU

52074-001 29 SOL Improved Fiscal Sustainability Reform Program

Grant 26-Nov-18 12-Feb-19 16,400,000.00 Program WB| AUSG| NZG| EU

Subtotal (9)

89,146,000.00 Sector Total (9)

89,146,000.00

Transport

Approved Before CPS Period

40263-022 30 SOL Domestic Maritime Support (Sector) Project G0292| G0293

23-May-12 20-Jul-16 9,585,176.00 Project NZG| AUSG

G0127 25-Nov-08 30-Jun-19 1,602,102.00 Project SCFP-DMSP

41171-022 31 SOL Transport Sector Development Project Grant 15-Dec-10 31-Dec-16 60,000,000.00 Project NZG| AUSG

42391-013 32 VAN Port Vila Urban Development Project G0276| G0275

13-Dec-11 31-Dec-18 31,000,000.00 Project AUSG

42392-013 33 VAN Interisland Shipping Support Project G0427| G0273

30-Nov-11 31-Dec-18 17,250,000.00 Project NZG

60 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

Project Number

Project Count

Country Project Name Approval Number

Approval Date

Closing Date

Total ADB Approved Amount

(US$)

Lending Modality

Source of Funds

44281-013 34 KIR Road Rehabilitation Project Grant 10-Dec-10 11-Jun-18 39,760,000.00 Project PRIF| WB

49319-001 35 VAN Cyclone Pam Road Reconstruction Project G0461 25-Nov-15 31-May-20 2,680,000.00 Project GEF

Subtotal (6)

161,877,278.00

Approved During CPS Period

42391-013 (32) VAN Port Vila Urban Development Project G0526 08-Dec-16 31-Dec-18 2,870,000.00 Project GEF

46499-002 36 SOL Sustainable Transport Infrastructure Improvement Program

Grant 27-May-16 31-Aug-20 23,350,000.00 RBL AUSG

48480-003 37 NAU Sustainable and Climate-Resilient Connectivity Project (formerly Port Development Project)

G0566| G0565

25-Jan-18 30-Jun-23 40,987,000.00 Project GCF| AUSG

48484-002 38 TUV Outer Island Maritime Infrastructure Project G0513 16-Nov-16 30-Jun-21 500,000.00 Project GEF

Subtotal (3)

67,707,000.00 Sector Total (9)

229,584,278.00

Water and Other Urban Infrastructure Services

Approved Before CPS Period

42394-022 39 TON Nuku'alofa Urban Development Sector Project

G0265 17-Oct-11 30-Jun-20 6,440,000.00 Project AUSG

43072-013 40 KIR South Tarawa Sanitation Improvement Sector Project (formerly Tarawa Sanitation Improvement Project)

G0387| G0263

17-Oct-11 31-Dec-19 14,560,000.00 Project WFPF| AUSG

45520-001 41 SAM Community Sanitation Project G9166 31-Jul-12 31-Jan-17 2,000,000.00 Project JFPR

46346-002 42 RMI Ebeye Water Supply and Sanitation Project G0439 28-Sep-15 30-Jun-22 4,000,000.00 Project AUSG

Subtotal (4)

27,000,000.00

Approved During CPS Period

42394-022 (39) TON Nuku'alofa Urban Development Sector Project

G0265 05-Dec-16 31-Dec-19 2,023,759.00 Project AUSG

49453-002 43 KIR South Tarawa Water Supply Project (formerly South Tarawa Water Sector Improvement Program)

G0653 30-Aug-19 31-Dec-27 41,590,000.00 Project GCF| WB

51271-001 44 SOL Urban Water Supply and Sanitation Sector Project

G0663 25-Sep-19 30-Jun-27 35,347,000.00 Sector EU | WB

Subtotal (2) 78,960,759.00 Sector Total (6) 105,960,759.00

Total approved before CPS period (21) 332,459,278.00 Total approved during CPS period (23) 526,807,682.00

Appendix 5: Overall Portfolio for Pacific during the CPSFR Validation (2016–2019) 61

Project Number

Project Count

Country Project Name Approval Number

Approval Date

Closing Date

Total ADB Approved Amount

(US$)

Lending Modality

Source of Funds

TOTAL (44) 859,266,960.00 ADB = Asian Development Bank; AUSG = Australian Grant; CEF = Clean Energy Fund; COL = concessionary ordinary capital resources lending; COO = Cook Islands; CPS = country partnership strategy; DIDA = Danish International Development Agency; ESSSN = Electricity Supply Security and Sustainability in Nauru; EU = European Union; FSM = Federated States of Micronesia; GCF = Green Climate Fund; GEF = Global Environment Facility; JBIC = Japan Bank for International Cooperation; JFPR = Japan Fund for Poverty Reduction; KIR = Kiribati; RMI = Marshall Islands; NAU = Nauru; NZG = New Zealand Grant; PAL = Palau; PRIF = Pacific Region Infrastructure Facility; REG = regional; SAM = Samoa; SCFP-DMSP = EC-Domestic Maritime Support (Sector) Project; SOL = Solomon Islands; STCF = Strategic Climate Fund; TON = Tonga; TUV = Tuvalu; VAN = Vanuatu; WB = World Bank; WFPF = Water Financing Partnership Facility. Source: Controller Departments’ database as of 31 December 2019; ADB eOperations database and ADB's project website, as of 31 January 2020.

Table A5.3: List of Nonsovereign Loans Approved, Ongoing, and Completed, 2016–2019

Project Number

Invest-ment No.

Loan / Gu No.

Project Count

Country Project name Approval

Date

Total ADB Approved

Amount (US$) Subsectors

Source of Funds

Energy Approved During CPS Period 49339-001 7515 3553 1 SAM Jarcon Pty Limited and Sun Pacific Energy

Limited (Solar Power Development) 04-Aug-17 2,000,000.00 Renewable Energy

Generation -Solar OCR

52329-001 7594 3784 2 REG Pacific Renewable Energy Program/ renewable Energy

17-May-19 100,000,000.00 Renewable Energy Generation -Solar

OCR | Guarantee

Subtotal (2) 102,000,000.00

Sector Total (2) 102,000,000.00

Total approved before CPS period (0) - Total approved during CPS period (2) 102,000,000.00

TOTAL (2) 102,000,000.00

ADB = Asian Development Bank; CPS = country partnership strategy; Gu= Guarantee; OCR = ordinary capital resources; REG = regional; SAM = Samoa. Source: Independent Evaluation Department’s database (as of 31 January 2020).

62 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

Table A5.4: List of Technical Assistance Approved, Ongoing and Completed, 2016–2019

Project Number

TA Count

Country TA

Type Approval Number

TA Name Approval

Date Closing

Date

Total ADB Approved Amount (US$)

Total Cofinancing

Amount (US$)

TCR Rating

Source of ADB Funds

Source of

Cofinan-cing

Agriculture, Natural Resources, and Rural Development

Approved Before CPS Period

43427-012 1 REG FIJ PNG

SOL TIM VAN

PATA 7753 Strengthening Coastal and Marine Resources Management in the Coral Triangle of the Pacific Phase 2

14-Dec-10 19-Jun-19 1,950,000.00 13,118,183.00 S TASF| RCIF

GEF

46449-001 2 REG CDTA 8360 Implementation of the Strategic Program for Climate Resilience: Pacific Region

25-Apr-13 05-Dec-17 - 3,691,000.00 S - STCF

Subtotal (2)

1,950,000.00 16,809,183.00

Approved During CPS Period

53369-001 3 REG RDTA 9907 Stocktaking Study for Benchmarking Sustainable Management of Exclusive Economic Zones in the Pacific

16-Dec-19 31-Jan-21 225,000.00 -

TASF

Subtotal (1)

225,000.00 - Sector Total (3)

2,175,000.00 16,809,183.00

Education

Approved Before CPS Period

46154-001 4 REG PATA 8794 Improving the Performance of Labor Markets in the Pacific

12-Dec-14 26-Mar-18 750,000.00 - LS TASF

46505-001 5 FSM RMI REG

CDTA 8552 National Education Planning and Management

12-Dec-13 31-Jan-20 700,000.00 -

TASF

47201-001 6 SOL CDTA 8487 Information and Communication Technology for Better Education Services

21-Oct-13 21-Nov-17 - 500,000.00 S

EAKPF

47308-001 7 REG CDTA 8511 Higher Education Assessment 15-Nov-13 06-Oct-16 225,000.00 - S TASF

Subtotal (4)

1,675,000.00 500,000.00

Approved During CPS Period

46505-001 (5) FSM RMI REG

CDTA 8552 National Education Planning and Management

20-May-16 31-Jan-20 - 921,878.00

GPFEF

Appendix 5: Overall Portfolio for Pacific during the CPSFR Validation (2016–2019) 63

Project Number

TA Count

Country TA

Type Approval Number

TA Name Approval

Date Closing

Date

Total ADB Approved Amount (US$)

Total Cofinancing

Amount (US$)

TCR Rating

Source of ADB Funds

Source of

Cofinan-cing

49456-001 8 REG RMI FSM

PPTA 9097 Improving the Quality of Basic Education in the North Pacific

18-Apr-16 25-Aug-17 500,000.00 -

TASF

52183-001 9 REG CDTA 9645 Strengthening Education in the Pacific Region

29-Nov-18 31-Dec-23 750,000.00 1,000,000.00

TASF HLTF| EAKPF

Subtotal (2)

1,250,000.00 1,921,878.00 Sector Total (6)

2,925,000.00 2,421,878.00

Energy

Approved Before CPS Period

46455-002 10 NAU PATA 8754a Electricity Supply Security and Sustainability

07-Nov-14 31-Oct-17 225,000.00 - S TASF

47352-001 11 NAU CDTA 8631 Institutional Strengthening of the Nauru Utilities Corporation

01-Apr-14 31-Mar-16 225,000.00 - S TASF

48346-001 12 SOL PPTA 8756 Solar Power Development Project

07-Nov-14 16-Sep-16 - 500,000.00

STCF

49338-001 13 SAM PPTA 8999b Development of Solar Power IPP

25-Nov-15 01-Sep-19 225,000.00 - HS CFPS

Subtotal (4)

675,000.00 500,000.00

Approved During CPS Period

49356-001 14 RMI CDTA 9225 Majuro Power Network Strengthening

09-Nov-16 03-Oct-18 - 690,000.00 S

CEF

49450-001 15 REG PPTA 9242 Pacific Renewable Energy Investment Facility (formerly Pacific Renewable Energy Investment Program)

24-Nov-16 30-Nov-26 5,000,000.00 3,935,000.00

TASF ACAF UNDP| HLTF| CEF

49450-010 16 REG CDTA 9425 Capacity Building and Sector Reform for Renewable Energy Investments in the Pacific

22-Nov-17 31-Dec-22 - 5,000,000.00

GCF

49450-022 17 REG PPTA 9772 Preparing the Pacific Renewable Energy Investment Facility (Phase 2)

19-Jul-19 31-Aug-22 3,000,000.00 1,000,000.00

TASF STCF

50240-002 18 SOL PPTA 9305 Tina River Hydropower Project 24-Mar-17 31-Jan-19 225,000.00 -

TASF

53209-001 19 REG PATA 9868 Development of the Pacific Energy Regulators Alliance

15-Nov-19 31-Jul-21 225,000.00 -

TASF

Subtotal (6)

8,450,000.00 10,625,000.00 Sector Total (10)

9,125,000.00 11,125,000.00

64 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

Project Number

TA Count

Country TA

Type Approval Number

TA Name Approval

Date Closing

Date

Total ADB Approved Amount (US$)

Total Cofinancing

Amount (US$)

TCR Rating

Source of ADB Funds

Source of

Cofinan-cing

Finance

Approved Before CPS Period

44384-012 20 REG CDTA 7832 Pacific Financial Technical Assistance Centre 2011-2014

12-Jul-11 31-Oct-18 1,000,000.00 - S TASF

46508-001 21 SOL CDTA 8723 Strengthening Financial Inclusion

24-Sep-14 04-Sep-19 600,000.00 -

TASF| FSDPS

46509-001 22 VAN CDTA 8336 Expansion of Rural Financial Services

15-Feb-13 25-Jul-16 225,000.00 - PS TASF

47373-001 23 REG CDTA 8729 Pacific Business Investment Facility

26-Sep-14 01-Nov-18 1,500,000.00 11,000,000.00 LS TASF PBITF

Subtotal (4)

3,325,000.00 11,000,000.00

Approved During CPS Period

50002-001 24 NAU CDTA 9143 Strengthening Financial Inclusion and Financial Sector Development

25-Jul-16 31-Dec-20 350,000.00 -

FSDPS

50396-001 25 REG PATA 9340 Supporting Finance Sector and Private Sector Development in the Pacific

12-Jul-17 30-Jun-22 2,500,000.00 -

TASF| FSDPS

53072-001 26 REG PATA 9848 Pacific Private Sector Development Initiative, Phase IV

06-Nov-19 31-Oct-24 2,000,000.00 14,026,000.00

TASF ATAG

Subtotal (3)

4,850,000.00 14,026,000.00 Sector Total (7)

8,175,000.00 25,026,000.00

Health

Approved During CPS Period

50282-002 27 REG PPTA 9295 Systems Strengthening for Effective Coverage of New Vaccines in the Pacific

10-Jan-17 30-Sep-19 800,000.00 -

TASF

52037-001 28 REG RDTA 9601 Developing the Health Sector in the Pacific

01-Oct-18 31-Oct-23 900,000.00 -

TASF

53085-002 29 SOL PPTA 9865 Preparing the Strengthening Urban Health Services Project

19-Nov-19 30-Sep-21 750,000.00 -

TASF

Subtotal (3)

2,450,000.00 - Sector Total (3)

2,450,000.00 -

Appendix 5: Overall Portfolio for Pacific during the CPSFR Validation (2016–2019) 65

Project Number

TA Count

Country TA

Type Approval Number

TA Name Approval

Date Closing

Date

Total ADB Approved Amount (US$)

Total Cofinancing

Amount (US$)

TCR Rating

Source of ADB Funds

Source of

Cofinan-cing

Information and Communication Technology

Approved Before CPS Period

47114-001 30 REG CDTA 8540 Pacific Information and Communication Technology Investment Planning and Capacity Development Facility

09-Dec-13 30-Apr-19 1,850,000.00 - HS TASF

Subtotal (1)

1,850,000.00 -

Approved During CPS Period

50409-002 31 TON COO REG

CDTA 9507 Pacific Information and Communication Technology Investment Planning and Capacity Development Facility (Phase 2) - Feasibility Assessment for e-Government Rollout in the Pacific Developing Member Countries (Subproject 1)

16-Mar-18 30-Nov-21 700,000.00 -

TASF

50409-003 32 PAL COO TON REG

CDTA 9587 Pacific Information and Communication Technology Investment Planning and Capacity Development Facility (Phase 2) - Information and Communication Technology Sector Assessment in the Pacific DMCs (Subproject 2)

06-Sep-18 30-Nov-21 300,000.00 -

TASF

52209-001 33 REG RDTA 9583 Sharing Knowledge from ADB's Pacific Operations

31-Aug-18 30-Sep-21 750,000.00 -

TASF

Subtotal (3)

1,750,000.00 - Sector Total (4)

3,600,000.00 -

Industry and Trade

Approved Before CPS Period

46475-001 34 REG RDTA 8384 Evolving Linkages of the Pacific Economies

17-Jun-13 16-Mar-17 500,000.00 - PS RCIF

Subtotal (1)

500,000.00 - Sector Total (1)

500,000.00 -

66 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

Project Number

TA Count

Country TA

Type Approval Number

TA Name Approval

Date Closing

Date

Total ADB Approved Amount (US$)

Total Cofinancing

Amount (US$)

TCR Rating

Source of ADB Funds

Source of

Cofinan-cing

Public Sector Management

Approved Before CPS Period

41191-012 35 REG CDTA 7656 Promoting Evidence-Based Policy Making for Gender Equity in the Pacific

25-Nov-12 30-Sep-16 1,450,000.00 - S TASF

42154-012 36 REG CDTA 6507 Strengthening Public Financial Management in Pacific Developing Member Countries

11-Dec-08 16-May-17 1,500,000.00 - PS TASF

45270-001 37 TON CDTA 7959 Implementing Strategic Economic Management

09-Dec-11 31-May-16 1,650,000.00 1,325,000.00 S TASF ATAG

45328-001 38 AFG NEP REG

CDTA 8065 Enhancing ADB's Engagement in Fragile and Conflict-Affected Situations

19-Mar-12 05-Jul-16 800,000.00 121,320.00 S TASF ATAG

45403-001 39 RMI CDTA 8061 Strengthening Economic Policy and Planning: Supporting the Implementation of the National Development Plan, 2012-2015

20-Mar-12 17-Aug-16 225,000.00 - S TASF

46108-001 40 TUV CDTA 8100 Institutional Strengthening of the Ministry of Finance and Economic Development

29-Jun-12 17-Sep-18 990,000.00 211,091.00 S TASF ATAG| ACAF

46221-001 41 REG CDTA 8088 Enhancing Engagement with Pacific Developing Member Countries, Phase 2

19-Dec-13 30-Jun-20 574,969.00 2,841,031.00

TASF ATAG

46366-001 42 REG CDTA 8257 Results-Based Strategy and Sector Planning in the Pacific

12-Dec-12 01-Jun-18 1,285,000.00 500,000.00 S TASF WFPF

46506-001 43 REG CDTA 8517 Implementing the Pacific Regional Audit Initiative in Pacific Island Countries, Phase 2

25-Nov-13 14-Mar-19 - 1,300,000.00 S

JFPR

46510-001 44 REG PATA 8378 Pacific Private Sector Development Initiative Phase 3

06-Jun-13 31-Dec-19 2,000,000.00 32,490,000.00

TASF NZG| ATAG

46511-001 45 KIR CDTA 8478 Enhancing Economic Competitiveness through State-Owned Enterprise Reform

08-Oct-13 01-Apr-19 222,000.00 800,000.00

TASF JFPR

Appendix 5: Overall Portfolio for Pacific during the CPSFR Validation (2016–2019) 67

Project Number

TA Count

Country TA

Type Approval Number

TA Name Approval

Date Closing

Date

Total ADB Approved Amount (US$)

Total Cofinancing

Amount (US$)

TCR Rating

Source of ADB Funds

Source of

Cofinan-cing

46512-001 46 SAM CDTA 8481 Promoting Economic Use of Customary Land, Phase III

10-Oct-13 17-Jul-18 550,000.00 - S TASF

47264-001 47 RMI FSM PAL REG

PATA 8581 Strengthening Public Sector Management in the North Pacific

16-Dec-13 01-Jul-19 1,500,000.00 562,000.00

TASF ATAG

47342-001 48 REG CDTA 8565 Pacific Economic Management (Phase 2)

13-Dec-13 01-Jul-19 1,475,000.00 - S TASF

47359-001 49 SOL CDTA 8761 Strengthening the Implementation of the National Development Strategy

18-Nov-14 28-Feb-19 600,000.00 - S TASF

47367-001 50 VAN CDTA 8724 Supporting the Preparation of the National Sustainable Development Plan

23-Sep-14 24-Aug-17 400,000.00 - S TASF

48345-001 51 REG CDTA 8819 Sector and Thematic Analyses in Policy Development

16-Dec-14 15-Dec-19 1,400,000.00 90,000.00

TASF ATAG

48397-001 52 REG AFG NEP PHI

MYA

CDTA 8821 Mapping Resilience to Fragility and Conflict in Asia and the Pacific

15-Dec-14 02-Oct-19 900,000.00 -

TASF

48482-001 53 FSM PATA 9038 State-Level Public Administration Review Phase 1

14-Dec-15 03-Aug-18 500,000.00 - S TASF

Subtotal (19)

18,021,969.00 40,240,442.00

Approved During CPS Period

42154-012 (36) REG CDTA 6507 Strengthening Public Financial Management in Pacific Developing Member Countries

18-Mar-16 16-May-17 40,000.00 - S TASF

46108-001 (40) TUV CDTA 8100 Institutional Strengthening of the Ministry of Finance and Economic Development

02-Jun-16 17-Sep-18 - 217,000.00 S

ATAG

46221-001 (41) COO KIR FSM SOL VAN REG

CDTA 8088 Enhancing Engagement with Pacific Developing Member Countries, Phase 2

23-Jun-17 30-Jun-20 1,400,000.00 -

TASF

68 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

Project Number

TA Count

Country TA

Type Approval Number

TA Name Approval

Date Closing

Date

Total ADB Approved Amount (US$)

Total Cofinancing

Amount (US$)

TCR Rating

Source of ADB Funds

Source of

Cofinan-cing

46506-001 (43) REG CDTA 8517 Implementing the Pacific Regional Audit Initiative in Pacific Island Countries Phase 2

07-Nov-17 14-Mar-19 400,000.00 - S TASF

46510-001 (44) REG PATA 8378 Pacific Private Sector Development Initiative, Phase III

18-Jun-18 31-Dec-19 - 4,500,000.00

NZG

46511-001 (45) KIR CDTA 8478 Enhancing Economic Competitiveness through State-Owned Enterprise Reform

04-Oct-16 01-Apr-19 430,000.00 -

TASF

46512-001 (46) SAM CDTA 8481 Promoting Economic Use of Customary Land, Phase III

21-Dec-16 17-Jul-18 100,000.00 - S TASF

47342-001 (48) REG CDTA 8565 Pacific Economic Management (Phase 2)

15-Jul-16 01-Jul-19 1,250,000.00 260,000.00 S TASF ATAG

47359-001 (49) SOL CDTA 8761 Strengthening the Implementation of the National Development Strategy

23-Mar-17 28-Feb-19 120,000.00 - S TASF

48345-001 (51) REG CDTA 8819 Sector and Thematic Analyses in Policy Development

07-Sep-16 15-Dec-19 725,000.00 700,000.00

TASF ATAG| NZG| GPFEF

49444-001 54 REG CDTA 9086 Building Project Implementation Capacities in the Pacific

18-Mar-16 31-Dec-20 5,000,000.00 -

TASF

49457-001 55 REG CDTA 9234 Pacific Financial Technical Assistance Centre, 2016–2022

18-Nov-16 30-Apr-22 800,000.00 -

TASF

49458-001 56 REG CDTA 9202 Promoting Evidence-Based Policy Making for Gender Equity in the Pacific (Phase 2)

07-Oct-16 31-Dec-20 750,000.00 -

TASF

50028-001 57 SAM TON TUV REG

CDTA 9464a Pacific Disaster Resilience Program

14-Dec-17 31-Dec-22 2,000,000.00 -

TASF

50303-001 58 REG CDTA 9174 Strengthening the Pacific Islands Forum Secretariat Regional Economic Policy Mandate in the Pacific

21-Sep-16 31-Jul-20 225,000.00 -

TASF

Appendix 5: Overall Portfolio for Pacific during the CPSFR Validation (2016–2019) 69

Project Number

TA Count

Country TA

Type Approval Number

TA Name Approval

Date Closing

Date

Total ADB Approved Amount (US$)

Total Cofinancing

Amount (US$)

TCR Rating

Source of ADB Funds

Source of

Cofinan-cing

50308-001 59 REG CDTA 9363 Pacific Fellows Program 30-Aug-17 31-Dec-21 900,000.00 -

TASF

51245-001 60 TUV CDTA 9419 Supporting Reforms to Strengthen Fiscal Resilience and Improve Public Service Delivery

07-Nov-17 30-Sep-20 700,000.00 -

TASF

52060-001 61 REG RDTA 9697 Building Resilience in the Pacific Small Island Developing States

19-Dec-18 31-Dec-20 450,000.00 -

TASF

52073-002 62 NAU VAN SOL REG

PPTA 9760 Improving Pacific Public Financial Management Facility

10-Jul-19 31-Aug-24 1,500,000.00 -

TASF

52204-001 63 REG CDTA 9651 Towards Effective and Sustainable Delivery of Development Results in Fragile Situations in the Pacific

22-Nov-18 21-Nov-23 650,000.00 -

TASF

52215-001 64 RMI FSM PAL REG

RDTA 9675 The Economic Impacts of the End of Compact Grant Assistance

06-Dec-18 31-Dec-21 750,000.00 -

TASF

52259-001 65 REG PNG TIM

CDTA 9685 Implementing a Differentiated Approach to Urban Development in the Pacific

13-Dec-18 31-Dec-23 3,500,000.00 -

TASF

52357-001 66 REG PATA 9719 Pacific Economic Management (Phase 3)

12-Mar-19 31-Mar-24 1,500,000.00 -

TASF

53419-001 67 REG RDTA 9936 Supporting Research on Pacific Development

20-Dec-19 29-Feb-24 225,000.00 -

TASF

Subtotal (14)

3,415,000.00 5,677,000.00 Sector Total (33)

41,436,969.00 45,917,442.00

Transport

Approved Before CPS Period

41171-022 68 SOL CDTA 7715a Transport Sector Development Project

15-Dec-10 28-Oct-16 - 800,000.00 S

JFPR

42392-013 69 VAN CDTA 7938a Establishment of the Maritime Safety Administration

30-Nov-11 11-Mar-19 500,000.00 1,000,000.00 S TASF NZG

46499-001 70 SOL PPTA 8596 Sustainable Transport Infrastructure Improvement Program

16-Dec-13 05-Jun-17 626,000.00 -

TASF

70 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

Project Number

TA Count

Country TA

Type Approval Number

TA Name Approval

Date Closing

Date

Total ADB Approved Amount (US$)

Total Cofinancing

Amount (US$)

TCR Rating

Source of ADB Funds

Source of

Cofinan-cing

46500-001 71 REG PATA 8345 Establishment of the Pacific Region Infrastructure Facility Coordination Office

27-Mar-13 31-Oct-19 1,000,000.00 9,255,788.00

TASF NZG | ATAG

46502-001 72 REG CDTA 8674 Trade and Transport Facilitation in the Pacific

30-Jun-14 31-Dec-19 - 2,000,000.00

JFPR

47294-001 73 REG PNG

PATA 8599 Assessing Trade Facilitation and Transport Logistics Performance in the Pacific

19-Dec-13 31-Jan-18 225,000.00 - S TASF

47358-001 74 SAM PATA 8889 Ports Development Master Plan

24-Apr-15 01-Mar-19 500,000.00 - S TASF

48148-001 75 SOL CDTA 8737 Supporting Good Governance through Safeguards

08-Oct-14 30-Jul-16 300,000.00 - S TASF

48480-001 76 NAU PPTA 9009 Port Development Project 03-Dec-15 30-Jun-23 900,000.00 -

TASF

48484-001 77 TUV PPTA 8923 Outer Island Maritime Infrastructure Project

06-Jul-15 07-Jul-17 600,000.00 -

TASF

48488-001 78 REG CDTA 8961 Strengthening Climate and Disaster Resilience of Investments in the Pacific

18-Sep-15 31-Dec-20 1,000,000.00 -

TASF

Subtotal (11)

5,651,000.00 13,055,788.00

Approved During CPS Period

42392-013 (69) VAN CDTA 7938 Establishment of the Maritime Safety Administration

18-Dec-17 11-Mar-19 150,000.00 - S TASF

46499-002 79 SOL CDTA 9119a Sustainable Transport Infrastructure Improvement Program

27-May-16 31-Dec-20 - 4,500,000.00

ATAG

46500-001 (71) REG PATA 8345 Establishment of the Pacific Region Infrastructure Facility Coordination Office

29-Feb-16 31-Oct-19 1,000,000.00 3,000,000.00

TASF NZL | EIB

46502-001 (72) REG CDTA 8674 Trade and Transport Facilitation in the Pacific

23-Aug-17 31-Dec-19 1,900,000.00 -

TASF

47358-001 (74) SAM PATA 8889 Ports Development Master Plan

14-Sep-16 01-Mar-19 750,000.00 - S TASF

48480-001 (76) NAU PPTA 9009 Port Development Project 23-Nov-17 30-Jun-23 - 2,611,000.00

ATAG

48488-001 (78) REG CDTA 8961 Strengthening Climate and Disaster Resilience of Investments in the Pacific

04-Jul-17 31-Dec-20 2,950,000.00 -

TASF| CLCF

Appendix 5: Overall Portfolio for Pacific during the CPSFR Validation (2016–2019) 71

Project Number

TA Count

Country TA

Type Approval Number

TA Name Approval

Date Closing

Date

Total ADB Approved Amount (US$)

Total Cofinancing

Amount (US$)

TCR Rating

Source of ADB Funds

Source of

Cofinan-cing

49445-001 80 VAN CDTA 9073 Institutional Strengthening for Environmental Safeguards in Vanuatu

22-Jan-16 20-Jun-17 225,000.00 - S TASF

49461-001 81 SOL CDTA 9127 Strengthening Solomon Islands' Maritime Safety and Establishing the Solomon Islands Maritime Safety Authority

29-Jun-16 31-Oct-19 800,000.00 -

TASF

49462-001 82 VAN CDTA 9263 Supporting the Vanuatu Project Management Unit and the Ministry of Infrastructure and Public Utilities

08-Dec-16 01-Mar-19 225,000.00 - S TASF

51065-001 83 KIR SOL VAN TON REG

PPTA 9331 Strengthening Domestic Transport Connectivity in the Pacific

21-Jun-17 21-Jun-22 5,000,000.00 500,000.00

TASF EAKPF

51268-002 84 SAM PPTA 9519 Preparing the Central Cross Island Road Upgrading Project

03-May-18 30-Jun-20 800,000.00 -

TASF

52184-001 85 VAN CDTA 9562 Infrastructure and Public Financial Management Support Facility

14-Aug-18 30-Jun-22 2,250,000.00 -

TASF

53103-001 86 NIU REG FIJ

PATA 9819 Pacific Region Infrastructure Facility Coordination Office-Leveraging Infrastructure for Sustainable Development

03-Oct-19 31-Oct-23 2,000,000.00 7,092,750.00

TASF NZG | ATAG

Subtotal (8)

18,050,000.00 17,703,750.00

Sector Total (19)

23,701,000.00 30,759,538.00 Water and Other Urban Infrastructure Services Approved Before CPS Period

44471-012 87 FSM CDTA 7927 Strengthening Infrastructure Planning and Implementation

23-Nov-11 21-Dec-16 550,000.00 700,000.00 S TASF JFPR

46162-001 88 REG FIJ

PNG

CDTA 8238 Strengthening Disaster and Climate Risk Resilience in Urban Development in the Pacific

05-Dec-12 14-Jun-16 - 650,000.00 S

JFPR

72 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

Project Number

TA Count

Country TA

Type Approval Number

TA Name Approval

Date Closing

Date

Total ADB Approved Amount (US$)

Total Cofinancing

Amount (US$)

TCR Rating

Source of ADB Funds

Source of

Cofinan-cing

46346-001 89 RMI PPTA 8306 Ebeye Water Supply and Sanitation Project

20-Dec-12 02-Nov-17 500,000.00 1,371,840.00

ATAG| WFPF

48486-001 90 PAL CDTA 9020 Water and Sanitation Sector Management

10-Dec-15 18-Oct-18 500,000.00 - LS TASF

Subtotal (4)

1,550,000.00 2,721,840.00

Approved During CPS Period

49453-001 91 KIR PPTA 9200 South Tarawa Water Supply Project

07-Oct-16 22-Nov-18 800,000.00 150,000.00

TASF WFPF

49455-001 92 TON PPTA 9328 Integrated Urban Resilience Sector Project

06-Jun-17 19-Jul-19 675,000.00 225,000.00

TASF ATAG

49460-001 93 REG PATA 9181 Strengthening Urban Infrastructure Investment Planning in the Pacific

29-Sep-16 28-Sep-21 2,700,000.00 -

TASF

51175-001 94 REG PPTA 9347 Pacific Urban Development Investment Planning and Capacity Development Facility

27-Jul-17 31-Aug-22 4,900,000.00 -

TASF

Subtotal (4) 9,075,000.00 375,000.00

Sector Total (8) 10,625,000.00 3,096,840.00

Total approved before CPS period (50) 35,197,969.00 84,827,253.00

Total approved during CPS period (44) 69,515,000.00 50,328,628.00

TOTAL (94) 104,712,969.00 135,155,881.00

ACAF = ADB Co-financed Assistance Fund; ADB = Asian Development Bank; AFG = Afghanistan; ATAG = ATF - Australian TA Grant; CDTA = capacity development technical assistance; CEF = Clean Energy Fund; CCFPS = Canadian Climate Fund for the Private Sector in Asia; CLCF = Climate Change Fund; COO = Cook Islands; CPS = country partnership strategy; EAKPF = e-Asia and Knowledge Partnership Fund; EIB = European Investment Bank; FIJ = Fiji; FSDPS = Financial Sector Development Partnership Special Fund; FSM = Federated States of Micronesia; GCF = Green Climate Fund; GPFEF = Global Partnership for Education Fund; HS = highly successful; HLTF = High-Level Technology Fund; IPP = independent power producer; JFPR = Japan Fund for Poverty Reduction; KIR = Kiribati; LS = less than successful; RMI = Republic of the Marshall Islands; MYA = Myanmar; NAU = Nauru; NEP = Nepal; NIU = Niue; NZG = ATF - New Zealand TA Grant; NZL = New Zealand Cooperation Fund for Technical Assistance; PAL = Palau; PATA = policy advisory technical assistance; PBITF = Pacific Business Investment Trust Fund; PHI = Philippines; PNG = Papua New Guinea; PPTA = project preparation technical assistance; PS = partially successful; RCIF = Regional Cooperation and Integration Fund; RDTA = research development technical assistance; REG = regional; S = successful; SAM = Samoa; SOL = Solomon Islands; STCF = Strategic Climate Fund; TASF = Technical Assistance Special Fund; TCR = technical assistance completion report; TIM = Timor-Leste; TON = Tonga; TUV = Tuvalu; U = unsuccessful; UNDP = ATF - UNDP; VAN = Vanuatu; WFPF = Water Financing Partnership Facility. a associated technical assistance, bnonsovereign technical assistance. Source: Controller’s Department database as of 31 December 2019; ADB eOperations database and ADB's project website, as of 31 January 2020.

APPENDIX 6: VALIDATION COMMENTS ON COUNTRY PARTNERSHIP STRATEGY RESULTS FRAMEWORK

Pacific Approach, 2016–2020

Outcomes and Indicators

Key Outcomes to which ADB Contributes

Outcome indicators Validation advice on how the CPSFR

could have used the results framework

to assess achievement of outcomes (Targets 2020)

Objective: Reduced Costs Renewable energy

Greater availability, reliability, and affordability of energy from renewable sources

Share of electricity generated from renewable resources

Consolidation of all individual project achievements could provide this – beyond the scope of this validation. Pacific Power Authority and national power authorities may have the data.

Connectivity Greater availability and affordability of ICT connectivity

(i) ICT coverage extended (increase in number of people using internet); and (ii) ICT costs reduced

Consolidation of all individual project achievements could provide this – beyond the scope of this validation. National data on current internet usage compared to 2016 could also have been used.

Enabling business environment

A more conducive environment for business

(i) Increased financial efficiency of SOEs; average return on assets and on equity; and (ii) Ease of starting and doing business improved

While not a well-defined indicator, country examples could have been provided. World Bank Doing Business ratings (see Appendix 7, Table A7.1)

Objective: Risks Managed Sound macroeconomic management

Greater resilience to external economic and financial shocks

Public expenditure and financial assessment performance improved

Not a well-defined indicator. Country examples could have been provided

Climate change and disaster risk management

Greater resilience to climate change and disaster risks

Proportion of loans and grants supporting (i) climate change mitigation and/or adaptation, and/or (ii) disaster risk management in the PIC-11 increased

This could have been provided from ADB data.

Objective: Value Creation Private sector development

Better environment for business and finance sector development

Increase in number of new businesses registered

PSDI data could have been cited.

Livable urban areas

More people in urban areas enjoy access to reliable water supply services

Percentage of urban population with access to water supply coverage increased and continuity of supply improved

UN Human Development Report

Investment in people

A more educated population

Students benefiting from new and improved education facilities

While there are very few education projects, results have not been compiled.

74 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

Pacific Approach, 2016–2020

Outcomes and Indicators

Key Outcomes to which ADB Contributes

Outcome indicators Validation advice on how the CPSFR

could have used the results framework

to assess achievement of outcomes (Targets 2020)

Objective: Efficient ADB operational and organizational management Greater operational effectiveness in the PIC-11

Lending and grant projects successfully completed

Completed sovereign operations rated successful: baseline 70%, target TBD

ADB data could have been used

Greater use of regional and subregional approaches

Proportion of operations supporting RCI increased: baseline 18%, target 30%

ADB data could have been used

Higher project readiness at approval

Time from approval to first major works reduced: baseline 29.6 months, target 18 months.

ADB data could have been used

Timely project processing and implementation

Average time from ADB approval to first contract award reduced: baseline 9.6 months, target 8 months

ADB data could have been used

Business process efficiency and client orientation improved

Average processing time for procurement from bid invitation to contract signing reduced: baseline 252 days, target 180 days

ADB data could have been used

Sovereign operations administered with substantial resident mission involvement: baseline 73%, target TBD

ADB data could have been used

All PIC-11 have field offices and at least one ADB staff member by 2020

ADB data could have been used

Development finance mobilized and transferred

Project development transfers for public–private partnerships facilitated: baseline 0; target TBD

ADB data could have been used

ADB = Asian Development Bank, ICT = information communication and technology, PIC = Pacific island countries, RCI = regional cooperation and integration, SOE = state-owned enterprise, TBD = to be determined. Sources: Pacific Approach, 2016–2020 results framework and Independent Evaluation Department.

APPENDIX 7: ANALYSIS OF PERFORMANCE AGAINST THE THREE STRATEGIC OBJECTIVES 1. The country partnership strategy final review (CPSFR) should have provided evidence (detailed descriptions and/or references to document sources) to demonstrate the level of relevance, effectiveness, efficiency, sustainability, and development impacts as they relate to the three strategic priorities, with examples provided at the project, sector, and national and regional levels. Since the CPSFR did not provide much evidence, the validation analyzed performance reported through the 14 project completion reports (PCRs) and nine PCR validation reports (PVRs), as well the likely performance of recently completed, mature, and new projects. The PVRs found the following five completed projects and programs to be successful: the Nauru Electricity Supply Security and Sustainability project,1 Nauru Fiscal Sustainability Reform Program,2 Solomon Islands Economic Growth and Fiscal Reform Program,3 Kiribati Road Rehabilitation Project with additional financing,4 and Kiribati/regional Higher Education in the Pacific Investment Program - Tranche 1.5 Four completed projects were validated as less than successful or unsuccessful: the Solomon Islands Provincial Renewable Energy Project was assessed to be unsuccessful6 while the Samoa SchoolNet and Community Access Project,7 Samoa Fiscal Resilience Improvement Program (Subprograms 1 and 2),8 and the Solomon Islands Transport Sector Development Project9 were all assessed as less than successful. 2. The following sections summarize the relevance, effectiveness, efficiency, sustainability, and development impacts of projects against the CPS’s three strategic priorities. Although many projects are categorized against one strategic priority, in reality they may fit into two or three concurrently.

1. Relevance of the three strategic priorities and investments 3. Reducing Costs. Limited energy, transport, and ICT access contribute to high costs for individuals, businesses, and governments in the PIC-11. National development strategies and plans sampled during the validation all highlight the need for better connectivity and more renewable energy. Projects under the Pacific Approach, 2016–2020 emphasized (i) scaling up renewable energy resources to increase access and reduce costs; (ii) improving transport infrastructure to decrease the costs of trade, goods, and services; and (iii) increasing ICT connectivity to lower the cost of communication. Investments in energy, transport, and ICT did not occur in all countries. 4. PCRs completed over the Pacific Approach, 2016–2020 period rate the power projects in Nauru and Samoa as highly relevant and in the Solomon Islands as relevant.10 All three energy projects were in line with government priorities. Evidencing this, the Nauru project improved the reliability and efficiency of base load diesel generation; the Samoa project expanded generation capacity and improved transmission and utility management; and the Solomon Islands project increased renewable energy in Auki, the provincial capital of Malaita province. The PVR for the Solomon Islands project downgraded the rating to relevant due to design preparedness issues (land issues).

1 IED. 2020. Validation Report: Nauru Electricity Supply Security and Sustainability Project. Manila: ADB. 2 IED. 2018. Validation Report: Fiscal Sustainability Reform Program in Nauru. Manila: ADB. 3 IED. 2019. Validation Report: Economic Growth and Fiscal Reform Program in Solomon Islands. Manila: ADB. 4 IED. 2019. Validation Report: Road Rehabilitation Project in Kiribati. Manila: ADB. 5 IED. 2019. Validation Report: Kiribati/regional Higher Education in the Pacific Investment Program - Tranche 1. Manila: ADB. 6 IED. 2020. Validation Report: Provincial Renewable Energy Project in Solomon Islands. Manila: ADB. 7 IED. 2019. Validation Report: SchoolNet and Community Access Project in Samoa. Manila: ADB. 8 IED. 2020. Validation Report: Fiscal Resilience Improvement Program (Subprograms 1 and 2) in Samoa. Manila: ADB. 9 IED. 2018. Validation Report: Transport Sector Development Project in Solomon Islands. Manila: ADB. 10 ADB. 2019. Completion Report: Electricity Supply Security and Sustainability Project in Nauru. Manila; ADB. 2019. Completion

Report: Power Sector Expansion Project in Samoa. Manila; ADB. 2019. Completion Report: Provincial Renewable Energy Project in Solomon Islands. Manila.

76 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

5. PVRs rated the transport projects in Kiribati and Solomon Islands relevant. The Kiribati project aimed to rehabilitate the main (only) road along the length of Tarawa atoll to provide a safer, more efficient transportation system to encourage economic growth and improve the quality of life. The Solomon Islands Transport Sector Development Project aimed to improve access to socioeconomic opportunities by rehabilitating and maintaining land, sea, and air transport infrastructure.11 A renewable energy program in FSM, not listed in the CPSFR, adopted the least cost approach to increase renewable energy, using wind and solar power to displace diesel generation; the PCR rated the project highly relevant.12 The PVR noted that the project design had some issues due to limited system modelling at preparation, which impeded the accuracy of outcome predictions. 6. New and ongoing projects include renewable energy and energy security projects in the Cook Islands, FSM, RMI, Nauru, and Samoa; road and maritime transport and port development projects in Nauru, Samoa, Solomon Islands, Tuvalu, and Vanuatu; and ICT connectivity projects (including submarine cables) in Cook islands, Palau, Kiribati, Nauru, and Samoa. The renewable energy projects in the Cook Islands, FSM, Nauru, Solomon Islands, Tonga, Tuvalu, and Vanuatu all target the use of solar or wind power to replace diesel generation, reducing imports of diesel fuel and carbon emissions. The Nauru project supports the national target of 50% renewable energy. The projects in Tonga and Tuvalu are focused on outer islands. The RMI projects are aimed at rehabilitating the tank farm, improving the distribution network, and adding metering; reduced network losses will significantly contribute to a reduction in diesel consumption and improve the utility’s revenue generation. Battery energy storage systems are being introduced in Tonga following Cyclone Geta. The Solomon islands Tina River Hydropower Project has been developed under a PPP and a special project company is being established to design, build, own, operate, and manage the plant. Several of these projects have been prepared under the Pacific Renewable Energy Investment Facility, which aims to transform energy use and electricity production sectors across the Pacific to low carbon, climate resilient pathways.13 7. The Nauru and Samoa (Apia) port development projects are aimed at economic growth and appropriately include measure to enhance resilience to climate change and increased storms, and are thus also related to the managing risks strategic priority. The Solomon Islands, Tuvalu, and Vanuatu domestic maritime projects target improved wharves and maritime facilities in outer islands; and projects in the Solomon Islands and Vanuatu are aimed at improved domestic shipping services, encouraging more inclusive growth, which is also related to the value added strategic objective. In the Solomon Islands, (i) the Sustainable Transport Infrastructure Improvement Program, which is results-based lending, supports the government’s medium- and long-term transport plans and strengthens country systems; and (ii) the Transport Sector Project Development Facility will improve the startup efficiency of priority transport projects by helping transport agencies prepare feasibility studies and detailed designs, and supporting initial procurement and safeguards activities, given the acknowledged lack of local capacity in these areas. The Tonga Transport Project Development Facility will provide a similar facility to improve project readiness. 8. Several projects (some cofinanced with the World Bank and other development partners) will improve internet connectivity, improving the business and educational enabling environment. Submarine cables have been financed in Samoa and between Tonga and Fiji. A regional submarine cable will link Samoa and French Polynesia with additional spurs to link Rarotonga and Aitutaki in the Cook Islands, and Niue. A regional cable project will connect Nauru, FSM, and Kiribati to Hawaii and Australia. Improved domestic internet systems should reduce internet costs and provide greater bandwidth. 9. The validation assesses the ADB-supported investments in this strategic priority relevant.

11 IED. 2019. Validation Report: Road Rehabilitation Project in Kiribati. Manila; IED. 2018. Validation Report: Transport Sector

Development Project in Solomon Islands. Manila: ADB. 12 ADB. 2019. Completion Report: Yap Renewable Energy Development Project in Federated States of Micronesia. Manila. 13 Approved by ADB in 2017 with $200 million allocated to the Pacific, and $500 million cofinancing. The facility will finance a

series of individual renewable energy projects in the PIC-11.

Appendix 7: Analysis of Performance against the Three Strategic Objectives 77

10. Managing Risks. The PIC-11 are among the most vulnerable countries in the world to the effects of climate change, and dependence on imported goods (including food and fuel) creates high exposure to international price fluctuations. They have limited capacity to cope with economic and climatic shocks, highlighting the need to increase disaster resilience and to build fiscal buffers. Projects under the Pacific Approach, 2016–2020 responded to these needs by (i) integrating climate-proofing measures into infrastructure works; (ii) building government and community capacity in disaster risk management (DRM); (iii) directly responding to the impacts of natural disasters; and (iv) supporting reforms to increase fiscal resilience and build economic buffers. Completed projects related to this objective include a cyclone recovery project in Tonga, transport flood recovery in the Solomon Islands, and improving fiscal resilience in Samoa.14 The PCR for Tonga rated the project highly relevant, while the other two were rated relevant. The Tonga and Solomon Islands projects were aimed at reducing hardships and restoring livelihoods. The Samoa Fiscal Resilience Improvement Program consisted of two subprograms; the first aimed to maintain macroeconomic stability and strengthen the country’s fiscal resilience, but the second subprogram, which had been designed to build on the achievements of the first, was cancelled. 11. The lack of clarity in the Pacific Approach, 2016–2020 objectives made it difficult for the CPSFR to demonstrate relevance. The Pacific Approach, 2016–2020 states that creating a more enabling environment for the private sector is an objective, and includes support for public sector reform related to the provision of goods and services through government business enterprises. But the CPSFR identifies (i) promoting good governance practices through capacity building and policy advice; and (ii) supporting institutional reforms to strengthen public sector management (PSM), as key areas where the Pacific Approach, 2016–2020 responded to needs. This is an example of the ambiguity caused in trying to group investments and sectors into one of the three strategic priorities when, in reality, it should to some extent be reported across two or three strategic priorities. For example, some economic and financial reform programs may target improving the business environment and conditions for growth, but if the main purpose is strengthening public finance and macroeconomic management, then they should be listed under the managing risks objective. The CPSFR mentioned a Nauru reform program under enabling value creation, whereas its main purpose was to improve public financial management (PFM) and the performance of state-owned enterprises (SOEs), and to establish the Nauru Intergenerational Trust Fund, although it did also improve the operations of the National Utilities Corporation, which is a core part of the value creation objective. The Solomon Islands Economic Growth and Fiscal Reform Program addressed both priorities; while economic growth was stated as its main purpose, it could have been included under value creation. A clearer delineation of objectives may help ADB to verify success against the next CPS. 12. Given the emphasis on disaster resilience in the Pacific Approach, 2016–2020, new and ongoing projects appropriately included (i) disaster resilience programs in the Cook Islands and Palau, and (ii) a regional disaster resilience program covering RMI, FSM, Samoa, Solomon Islands, Tonga, and Tuvalu, which supports policy actions in DRM and provides countries with a source of contingent financing for timely disaster response, early recovery, and reconstruction activities. In RMI, the third Drought Disaster Response Project targeted drought relief, providing clean water, health kits, food rations, and the logistics costs of delivery assistance to drought-affected areas. Cyclone rehabilitation assistance was provided in Vanuatu after Cyclone Pam (mostly road infrastructure rehabilitation) and in Tonga after Cyclone Gita (immediate relief assistance followed by a larger project to restore electricity supplies). 13. ADB’s support for PSM was also appropriate. In Kiribati, the Strengthening Economic Management Reform Program adopted a programmatic approach, with one subprogram each in 2017 and 2018, building on government-led reforms supported by a multi-partner policy action matrix and providing a stable macroeconomic framework. In RMI, the Public Financial Management Project is

14 ADB. 2019. Completion Report: Cyclone Ian Recovery Project in Tonga. Manila; ADB. 2019. Completion Report: Transport Sector

Flood Recovery Project in Solomon Islands. Manila; ADB. 2019. Completion Report: Fiscal Resilience Improvement Program in Samoa. Manila.

78 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

addressing the low institutional capacity of the Ministry of Finance to effectively implement PFM and SOE reforms, thus straddling strategic objectives 2 and 3. In the Solomon Islands, the Improved Fiscal Sustainability Reform Program builds on previous policy-based programs and TA to further improve PFM and fiscal sustainability, but also addresses the private sector investment climate. In Tonga the Building Macroeconomic Resilience is a multiyear budget support program consisting of three subprograms aimed at strengthening Tonga’s long-term growth prospects and capacity to respond to external shocks. It supports government efforts to improve (i) its fiscal position by adopting prudent policies and better PFM; and (ii) the business climate by continuing policy, regulatory, and public enterprise reforms. The programmatic design allows for reform sequencing across multiple areas to account for Tonga’s limited implementation capacity, while providing flexibility to respond to emerging opportunities and constraints. In Tuvalu the Improved Fiscal and Infrastructure Management Program aims to strengthen Tuvalu’s fiscal sustainability by supporting priority policy actions under the government’s rolling multiyear policy reform matrix. It is a single-tranche stand-alone grant supporting reforms to improve the management of public finance and national infrastructure. While the difference between this single tranche approach to reforms and the programmatic approach is discussed below, a more detailed analysis is needed to draw any firm conclusions on which is the more effective approach. 14. The validation assesses the ADB-supported investments in this strategic priority relevant. 15. Enabling Value Creation. Strengthening human and institutional capacity is essential for increasing private sector investment and encouraging more equitable socioeconomic growth. The Pacific Approach, 2016–2020 responded to these needs by (i) promoting good governance practices through capacity building and policy advice; (ii) supporting institutional reforms to strengthen PSM; (iii) helping utilities and SOEs to strengthen commercial performance; (iv) helping to improve the business enabling environment; and (v) facilitating private sector operations. Recognizing that populations in the PIC-11 are moving to cities, projects under the Pacific Approach, 2016–2020 helped further enable value creation by supporting projects in infrastructure and services, including water supply, sanitation, education, and health. However, support in this area could have been more relevant if projects had included more public sector institutions, increased private sector investment, and enabled more equitable opportunities for people to engage in the formal economy. The CPSFR provided a separate section on private sector development, which covered interventions through PSDI and nonsovereign operations. 16. The CPSFR lists four completed projects that aligned to this objective, three with PVRs. PVRs rated the fiscal and economic reform programs in Nauru and the Solomon Islands relevant.15 The program in Nauru built on ADB’s support for the 2012 reform program to improve PFM and the performance of SOEs, and to establish the Nauru intergenerational trust fund to save unexpected gains or windfalls in public revenue. The PVR cited the alignment between the program’s outcome of improved fiscal sustainability and the expected impact of an improved and sustainable quality of life, but noted that policies could have been better aligned with outputs. While the project supported the development of the economy by stabilizing revenue and helping in the provision of improved infrastructure, it targeted a reduction in risks and thus could have been included under the risk management strategic priority. The support for reforms in the Solomon Islands built on previous ADB support, and was aimed at revenue management and economic growth, encouraging the diversification of government revenue and enabling environment to stimulate economic growth, especially in rural areas, and therefore could also have been included under the risk management strategic priority. 17. Two projects were completed in Samoa, an education project focused on ICT to achieve a more equitable secondary education system enhanced by effective ICT, and a community sanitation project.16 The PVR for the ICT project rated the project less than relevant because the project design should have

15 IED. 2018. Validation Report: Fiscal Sustainability Reform Program in Nauru. Manila; IED. 209. Validation Report: Economic

Growth and Fiscal Reform Program in Solomon Islands. Manila: ADB. 16 IED. 2019. Validation Report: SchoolNet and Community Access Project in Samoa. Manila; ADB. 2018. Implementation

Completion Memorandum: Community Sanitation Project in Samoa (financed by the Japan Fund for Poverty Reduction). Manila.

Appendix 7: Analysis of Performance against the Three Strategic Objectives 79

emphasized capacity development in subject content and in the training support provided to teachers on the use of ICT to improve student learning outcomes. As a Japan Fund for Poverty Reduction (JFPR) grant project, an Implementation Completion Memorandum (ICM) was prepared for the community sanitation project, and thus no formal ratings were provided. The ICM indicates that it was a relevant investment as most Samoan households rely on poorly functioning and leaking septic tanks for their sanitation, and the project was designed to help establish an innovative delivery method and strengthen institutional arrangements to provide subsidized sanitation infrastructure to low-income households. 18. Ongoing and new projects include water and sanitation projects in FSM (Chuuk Water Supply and Sanitation Project), RMI (Ebeye Water Supply and Sanitation Project), Palau (Koror-Airai Sanitation Project), and the Solomon Islands (Urban Water Supply and Sanitation Sector Project). Urban projects are being implemented in Tonga (Nuku'alofa Urban Development Sector Project and Integrated Urban Resilience Sector Project) and Vanuatu (Port Vila Urban Development Project and Luganville Urban Water Supply and Sanitation Project). A basic education program continues in FSM and RMI. In Tonga, a program introducing eGovernment through digital health is about to start. A regional health program in Samoa, Tonga, Tuvalu, and Vanuatu, which is strengthening systems for effective coverage of new vaccines, adopts a regional approach to strengthening critical components of health systems for improved immunization outcomes. In Samoa, an AgriBusiness Support Project is promoting the commercialization and export of agricultural produce and processed products along agro-value chains to stimulate agriculture’s role in economic growth and poverty reduction in Samoa. Direct engagement with the private sector and the activities of the PSDI also enable value creation. 19. A fairly diverse range of projects cover water and sanitation, urban development, health, and education, but with a very limited focus on value creation. These projects would fit better under a category of human development, but this is not one of the three Pacific Approach, 2016–2020 strategic priorities; under Strategy 2030, the urban projects could be included under livable cities, which is a quite different objective. During consultations with RMI, the government and stakeholders were clear that the objective was improvement in the quality of life of the population and not to make them more productive for employment opportunities, which is a much longer term and higher level goal of enabling value creation. It is worth noting that the strategy of managing risks also includes improved health and increased access to water and sanitation as target outcomes. Improving basic education in FSM and RMI is similarly not really in line with the Pacific Approach, 2016–2020 strategic priorities. While the report and recommendation of the President states that “education is a core area of the Pacific Approach”, the strategy focuses more on skills development. In addition, and as noted above, the financial management reform programs could also have been included under the managing risks objective. This validation therefore concludes that the enabling value creation objective was not clearly thought through nor clearly targeted. 20. The validation assesses ADB-supported investments in this strategic priority less than relevant.

2. Effectiveness of the three strategic priorities and investments 21. The CPSFR and this validation examine the performance of completed, mature, and ongoing projects and programs according to their relationship to the strategic objective that the investment is primarily aligned with. PCRs and PVRs were drawn upon for both national and regional investments that were completed and assessed. This validation tried to assess the likely effectiveness of mature ongoing projects, but the CPSFR did not assess these and it was hard to find a lot of indications of their likely effectiveness. This validation has therefore used its judgment judiciously in assessing the performance of ongoing projects and completed projects that do not have a PCR or PVR. 22. Reducing costs. Costs were reduced in some countries by: (i) improving connectivity through ICT; (ii) strengthening transport links; and (iii) increasing the availability, reliability, and affordability of energy supply from renewable sources. The Nauru Electricity Supply Security and Sustainability Project was said

80 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

to have achieved or surpassed targets. But the project’s intended impact of increased economic activity in Nauru was not included in sthe PCR design and monitoring framework and not assessed. The project resulted in a 16% reduction in fuel imports recorded in the 6 months after project completion and this was attributed to the abandonment of inefficient small generators by consumers who connected to the improved power supply. Service delivery in hospitals and quality of life also improved with uninterrupted power supply. However, the PCR did not assess changes in economic activity, which is essential in considering the investment’s contribution to reducing costs. In contrast, a PVR confirmed that the Kiribati Road Rehabilitation Project was successful and effective and found that it had a transformative effect on the quality of life and economic activity in the beneficiary communities.17 A PCR on the Samoa Power Sector Expansion Project rated the project effective on the basis that the project had achieved the intended outcomes of improving the quality, reliability, and cost effectiveness of the power supply.18 23. However, other projects were less successful. The FSM renewable energy project increased renewable energy generation as a percentage of total generation by 19%, but just below the 22% target as fewer wind turbines were installed than planned. Improvements in diesel generation efficiency also missed the target. In addition, the planned output of creating income-generating opportunities through the tourism project was not completed; the planned output of efficient project management services, as measured by compliance with contract awards and disbursements, was not met; and the gender action plan (GAP) component was unsuccessful. Two projects in the Solomon Islands also experienced challenges during implementation. The Solomon Islands Provincial Renewable Energy Project grappled with land acquisition difficulties, which halted implementation (the project closed with $0.43 million spent); and the Solomon Islands Transport Sector Development Program only partially achieved outcome targets. 24. Other projects are relatively new, largely approved from 2018 onwards, and thus it was too early to measure achievements. If the Cook Islands renewable energy project is successful, it will result in annual savings of $1.09 million liters of diesel consumption and the annual reduction of 2,930 tons of carbon dioxide emissions.19 In Samoa, the renewable energy project will supply 3.79 GWh of hydropower electricity to customers every year, avoiding at least 8,904 tons of carbon dioxide emissions per year.20 Under most of the ICT projects, bandwidth availability is expected to increase at least 20%, while costs should be reduced by 15% or more. Implementation delays in the maritime project in Vanuatu are likely to affect its effectiveness rating (delays in wharf construction).21 While the Vanuatu project and the Solomon Islands maritime project have helped to improve shipping services by establishing franchised routes, the franchised routes in the Solomon Islands to outer islands are unable to operate without a subsidy, impacting the likely effectiveness of the project.22 Five routes are operational under the Vanuatu project, but the government does not intend to develop new routes until the five current routes have been piloted and their operation has become stable. 25. This validation assesses that around half the completed and nearly completed projects under this objective may be performing effectively; but that the newer renewable energy projects and the ICT projects may perform better. Renewable energy projects in the Cook Islands, FSM, Nauru, Solomon Islands, Tonga, Tuvalu, and Vanuatu all target the use of solar or wind power to replace diesel generation, which is likely to reduce the cost of imports for diesel fuel and carbon emissions. The ICT projects and

17 IED. 2019. Validation Report: Road Rehabilitation Project in Kiribati. Manila: ADB. 18 ADB. 2019. Completion Report: Power Sector Expansion Project in Samoa. Manila. 19 ADB. 2019. Report and Recommendation of the President to the Board of Directors: Proposed Loan and Administration of Grant

to Cook Islands for the Renewable Energy Sector Project. Manila. 20 ADB. 2013. Report and Recommendation of the President to the Board of Directors: Proposed Loan and Administration of Grant

to Samoa for the Renewable Energy Development and Power Sector Rehabilitation Project. Manila. 21 ADB. 2015. Report and Recommendation of the President to the Board of Directors: Proposed Loan and Administration of Grant

to Vanuatu for the Interisland Shipping Support Project. Manila. 22 ADB. 2008. Report and Recommendation of the President to the Board of Directors: Proposed Asian Development Fund Grant

Loan and Administration of Grant to Solomon Islands for the Domestic Maritime Support (Sector) Project. Manila.

Appendix 7: Analysis of Performance against the Three Strategic Objectives 81

undersea cable projects are progressing well. The maritime projects are, however, likely to be rated less than effective. 26. The validation assesses the performance of the program related to this strategy objective less than effective. 27. Managing risks. Risks were well managed in some countries including (i) increasing resilience to climate change through policy support and physical interventions, (ii) responding to disasters; (iii) addressing cross-border health security issues, and (iv) strengthening PSM capacities to increase fiscal resilience. Two projects supported the recovery of two countries from natural disasters – the Solomon Islands Transport Sector Flood Recovery Project23 and the Tonga Cyclone Ian Recovery Project.24 The Solomon Islands program helped generate savings in travel time by 5% and helped to restore economic activity to pre-flood levels. While travel costs have increased slightly, people now have access to better quality public transport. However, local travel is adversely impacted by the deterioration of connecting and adjacent roads. The Tonga project delivered outputs ahead of schedule, enabling rehabilitated services and facilities to be used much earlier than expected, while also providing additional deliverables that allowed some of the important public services to resume under better conditions, including an upgraded public market. 28. The Fiscal Resilience Improvement Program in Samoa comprised two subprograms, but only the first was implemented because Samoa’s debt risk rating increased to high risk during implementation, making it eligible to receive 100% grant assistance from ADB, thus cancelling the second subprogram.25

The PCR rated this investment less than effective, noting that ADB was unable to make significant changes mid-program to reflect the evolving policy landscape in Samoa, whereas other development partners were able to adjust.26 29. The new and ongoing projects under this objective include (i) disaster resilience programs in Cook Islands27 and Palau;28 and (ii) a regional disaster resilience program covering FSM, RMI, Samoa, Solomon Islands, Tonga, and Tuvalu. These projects support policy actions in DRM and provide contingent financing for timely disaster response, early recovery, and reconstruction activities.29 The outlook for these investments is currently positive. Cyclone rehabilitation assistance in Vanuatu30 and Tonga31 are also preliminarily assessed as effective based on progress reports and in-country discussions by the validation team. However, the CPSFR did not provide information to verify the claim that ADB support is addressing cross-border health security issues. 30. The validation assesses the performance of the program in relation to this strategy objective effective. 31. Enabling value creation. Human and institutional capacity have been built to improve the business enabling environment and increase private sector investment across the region. The program of assistance (i) used regional approaches to address shared barriers to business growth; (ii) strengthened human capacity with targeted trainings, including innovative applications of ICT to improve education; (iii) streamlined processes for opening a business and accessing finance; and (iv) delivered improved water and sanitation in urban areas to support healthier, more productive communities. The CPSFR states that all corresponding projects, for which evaluation reports are available, are rated effective, and cites

23 ADB. 2019. Completion Report: Transport Sector Flood Recovery Project in Solomon Islands. Manila. 24 ADB. 2019. Completion Report: Cyclone Ian Recovery Project in Tonga. Manila. 25 ADB. 2019. Completion Report: Fiscal Resilience Improvement Program (Subprograms 1 and 2) in Samoa. Manila. 26 IED. 2020. Validation Report: Fiscal Resilience Improvement Program (Subprograms 1 and 2) in Samoa. Manila: ADB. 27 ADB. 2019. Report and Recommendation of the President: Cook Island Disaster Resilience Program (Phase 2). Manila. 28 ADB. 2018. Report and Recommendation of the President: Palau Disaster Resilience Program. Manila. 29 ADB. 2019. Report and Recommendation of the President: Regional Pacific Disaster Resilience Program. Manila. 30 ADB. 2019. Report and Recommendation of the President: Vanuatu Cyclone Pam Road Reconstruction Project. Manila. 31 ADB. 2019. Report and Recommendation of the President: Tonga Cyclone Gita Recovery Project. Manila.

82 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

four: the Solomon Islands Economic Growth and Fiscal Reforms Program,32 the Nauru Fiscal Sustainability Reforms Program,33 the Samoa Community Sanitation project,34 and the Samoa SchoolNet and Community Access Project.35 A PVR for the Solomon Islands program supports the effectiveness rating with both outcome targets being achieved (increases in domestic revenue and the number of new companies registered). The CPSFR, however, fails to inform that a PVR found the Samoa SchoolNet and Community Access Project both less than successful and less than effective.36 Some output targets were not fully achieved, and the achieved outcome of enhanced student learning cannot be fully attributed to project outputs. The project design was overambitious to establish a unified data system, which was ultimately unachievable within the project scope and timeframe. The sub-output on developing the midterm expenditure and financial frameworks was not achieved, and at completion, changes in the use of technology rendered this output irrelevant. 32. A PVR for the Nauru program supports the effectiveness rating with the improvement of the performance of the National Utilities Corporation and the establishment of a well-structured and well-managed Nauru intergenerational trust fund, which was the main feature of the program, suggesting that the program might have been more appropriately included under the managing risks objective. A PCR confirmed that the Samoa Community Sanitation Project exceeded the target number of septic tank installations, including full coverage of seven villages near the critical water stream compared with the 60% target. 33. Ongoing and new projects include water and sanitation projects and urban projects in several countries and a basic education project in FSM and RMI.37 A regional health program is yet to start in Samoa, Tonga, Tuvalu, and Vanuatu focusing on new vaccines.38 This project plans to adopt a regional approach to strengthening critical components of health systems for improved immunization outcomes. While most of these projects are too new to assess for their effectiveness, the water and sanitation project in Ebeye is already producing benefits, increasing the supply of water, and is likely to be effective on the proviso that the sanitation component is implemented effectively. The project is also addressing RMI capacity constraints. The improved hygiene component is complete and 95% of the Ebeye population have been exposed to the project's hygiene awareness program. It is too early to assess progress on the basic education project, although mission discussions indicated the quality of teacher training is good. 34. Improving the enabling environment for private sector development, a key component of the enabling value creation strategic priority, is discussed in the CPSFR in a later part of its assessment, covering private sector and nonsovereign operations (Section E of this validation). An IED evaluation of the Pacific Private Sector Development Initiative, 2007–2017, found that the initiative had improved the enabling business environment in 14 ADB Pacific DMCs.39 Over the past 10 years, the PSDI launched 276 subprograms, 93 of which had been completed by 30 June 2017. The program has supported Pacific DMC governments in the following areas: access to finance, business law reform, state-owned enterprise (SOE) reforms, PPPs, the economic empowerment of women, and competition and consumer protection. This activity was complemented by analytical work and subprograms on cross-cutting issues. However, the evaluation also found that delivered outputs did not fully achieve the intended outcomes and that ADB had not provided sufficient strategic guidance, thus missing out on opportunities to draw on its knowledge and experience to lead the program. The evaluation recommended that to achieve better outcomes through the investment, ADB needs to provide greater strategic guidance, review the management model for PSDI, put in place a fully functional monitoring and evaluation (M&E) system

32 IED. 2019. Validation Report: Economic Growth and Fiscal Reform Program in Nauru. Manila: ADB. 33 IED. 2019. Validation Report: Fiscal Sustainability Reform Program in Nauru. Manila: ADB. 34 ADB. 2018. Implementation Completion Memorandum: Community Sanitation Project in Samoa. Manila. 35 IED. 2019. Validation Report: SchoolNet and Community Access Project in Samoa. Manila: ADB. 36 Footnote 95. 37 ADB. 2017. Report and Recommendation of the President: Improving the Quality of Basic Education in the North Pacific. Manila. 38 ADB. 2018. Report and Recommendation of the President: Systems Strengthening for Effective Coverage of New Vaccines in the

Pacific Project. Manila. 39 IED. 2019. Project Performance Evaluation: Private Sector Development Initiative. Manila: ADB.

Appendix 7: Analysis of Performance against the Three Strategic Objectives 83

that includes mapping out the results chain of subprograms, and rethink and enhance the focus area on the economic empowerment of women. Validation interviews with PSDI in Sydney confirmed that someone had been recruited to develop a long-term M&E framework for PSDI, and that it should show complementarities and linkages to ADB, the Australian Department of Foreign Affairs and Trade, and New Zealand Ministry of Foreign Affairs and Trade results frameworks as part of the PSDI internal framework. The business environment in the Pacific remains problematic, as evidenced through the World Bank data on ease of doing business (Table 1). The PIC-11 are ranked well below the rest of the Asia-Pacific region and most Pacific countries have seen a significant deterioration in their ranking over 2016–2020. 35. The Pacific Approach, 2016–2020 strategy for increasing private sector development has been less than effective to date. The validation assesses the overall performance of the program in relation to this strategy objective less than effective.

Table A7.1: World Bank Ease of Doing Business

Country Rank 2020

Rank 2016

Starting a

Business

Dealing with Construction

Permits

Getting Electricity

Registering Property

Getting Credit

Protecting Minority Investors

Paying

Taxes

Trading across

Borders

Enforcing Contracts

Resolving Insolvency

Samoa 98 (96) 46 94 71 68 119 128 82 154 86 140 Fiji 102 (88) 163 102 97 57 165 97 101 79 101 98 Tonga 103 (78) 62 69 95 166 48 153 102 97 98 138 Vanuatu 107 (94) 137 163 101 84 37 147 67 148 138 101 PNG 120 (145) 142 122 118 127 48 72 118 125 173 144 Solomons

Islands 136 (112) 110 172 112 155 104 136 41 160 157 145

Palau 145 (136) 132 129 153 47 104 188 113 139 125 166 RMI 153 (140) 83 76 140 187 104 179 79 76 106 167 FSM 158 (148) 174 136 122 187 104 185 111 65 184 125 Kiribati 164 (149) 149 169 172 150 173 136 98 135 121 168 FSM = Federated State of Micronesia, PNG = Papua New Guinea, RMI =.Republic of Marshall Island Note: Nauru and Tuvalu are not ranked Source: World Bank Doing Business 2020 (and 2016).

3. Efficiency of the three strategic priorities and investments 36. The CPSFR did not discuss or rate the efficiency of projects. Of the 14 projects and programs for which PCRs are available, 2 are rated as highly efficient, 8 as efficient, 3 as less than efficient, and 1 as inefficient. These ratings were consistent with the ratings provided in the nine corresponding PVRs. The validation has examined the performance of projects by grouping them according to their contribution to the three strategic objectives. 37. Reducing Costs. Implementation delays were common in renewable energy and infrastructure projects. Four completed energy projects have PCRs, two of which have PVRs. The PCRs rated the projects as follows:

(i) The PVR assessed the Nauru Electricity Supply Security and Sustainability Project highly efficient, with an Economic internal rate of return (EIRR) of 18%.

(ii) The PVR assessed the Solomon Islands Provincial Renewable Energy Project inefficient because land disputes caused delays in contracting and necessitated the untimely closure of the project.

(iii) The PCR assessed the Samoa Power Sector Expansion Project efficient. (iv) The PCR assessed the FSM Yap Renewable Energy Project less than efficient owing to a low EIRR

of 3% as fuel prices dropped. The solar component has a return of 10% and wind 6%. 38. The ongoing Cook Islands renewable energy project is affected by delays in subproject preparation, land acquisition, and procurement. In RMI, the grant for the power project has been

84 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

extended by 2 years because of delays in the project implementation. The tender for the advance metering system package failed twice. A minor change was processed to change the procurement method from limited international bidding to shopping, and a consultant is assisting in procurement. Delays have recently occurred in the Tonga Outer Island Renewable Energy Project, which is installing solar and wind power. The delay was due to the government instruction to delay tranche 3 approval, while it took advantage of Tonga's categorization as a 100% grant country after an International Monetary Fund Article IV mission in 2017. In practical terms, this has delayed the project by nine months. In Vanuatu, there was a slow start to contract procurement on the energy access project. No responsive bids were received for the transmission and distribution contract, and rebidding was scheduled to commence in the first quarter of 2020 with expected contract award in the third quarter of 2020. Bid prices for all three contracts for the Brenwe hydro project (including transmission and distribution) have been received; however, a shortfall of about $5.5 million is expected for implementing the transmission and distribution contracts. The government is considering options to source additional funds or curtail the scope for the transmission and distribution contracts. 39. As regards infrastructure projects, the PVR rated the Kiribati Road Rehabilitation Project (with additional financing) efficient, although it suffered implementation delays. The PCR for the Solomon Islands Transport Sector Development Project rated the project less than efficient because of the lack of cost effectiveness of maintenance work and significant implementation delays. 40. Major delays have occurred in all maritime infrastructure projects. Civil works in the Vanuatu inter-island shipping project have been delayed because of design issues at the main domestic wharf in Port Vila. Work is about 70% complete, but concerns about wharf stability and faulty designs led to the contractor being issued with a Taking-Over Certificate in May 2018, and work on the wharf and on outer island wharves was suspended, and the contractor has also demobilized from the wharf site.40 Construction on the Tuvalu Outer Island Maritime Infrastructure Project stopped because the subcontractors demobilized their operations due to contractual issues. The government received confirmation in October 2019 that the contractor will take over the civil works and has started mobilizing its resources, but an extension is likely. Progress was also stalled as a result of Severe Tropical Cyclone Tino in January 2020.41 Implementation of the Apia port in Samoa has been slow because of unexpected demands on the port authority’s human resources, with labor market demand causing high turnover of trained staff. Construction of the Nauru port has been delayed three months. The Transport Sector Project Development Facility in the Solomon Islands and a similar investment in Tonga are expected to improve the startup efficiency of priority transport projects, helping the government transport agencies to prepare feasibility studies and detailed designs, and supporting initial procurement and safeguards activities. 41. ICT projects have been more efficient, but there are delays in effectivity in Nauru and Kiribati, while in Palau the operator will need support to improve the efficiency of its operations to make the internet service more affordable. 42. This validation assesses the performance of the program related to this strategy objective less than efficient. 43. Managing risks. The Tonga Transport Sector Flood Recovery Program PCR rated the project highly efficient and noted that project cost estimates and schedules were well researched and accurately projected during design, with some cost savings eventuating. The PCR for the Solomon Islands Flood Recovery Program rated the project efficient with a high EIRR of 29%, which is to be expected given the benefits of restoring full traffic flows to Honiara with a bridge and culvert reconstruction. There were no

40 The government, ADB, and New Zealand Ministry of Foreign Affairs and Trade (NZMFAT) have agreed and finalized an action

plan to follow a two-stage process to get the project on-track. 41 Cyclone Tino brought waves as high as 8m (26 ft), which struck Tuvalu's low-lying atolls and surrounding waters, causing

catastrophic flooding and uprooting numerous crops. Indicating the level of destruction that the waves caused, the highest elevation above sea level in Tuvalu is 4.6 meters (15 ft).

Appendix 7: Analysis of Performance against the Three Strategic Objectives 85

cost over runs, but some delays occurred in completing construction. The Samoa Fiscal Resilience Improvement Program is rated less than efficient because ADB did not implement subprogram 2, despite completing all components of subprogram 1 successfully. 44. New and ongoing projects include disaster resilience programs in Cook Islands and Palau, and a regional disaster resilience program covering RMI, FSM, Samoa, Solomon Islands, Tonga, and Tuvalu. Implementation delays are not currently anticipated, as the projects respond to demand as it arises. Progress reports on rehabilitation assistance following Cyclone Pam in Vanuatu and Cyclone Gita in Tonga have been positive, although procurement presented some issues. 45. The validation assesses the performance of the program related to this strategy objective efficient. 46. Enabling value creation. All four completed projects under this objective were rated efficient in the PVRs, including the Samoa SchoolNet and Community Access Project, which was rated less than successful overall. The SchoolNet Project was affected by weak implementation capacities and the fact that most materials and supplies for the project were not available locally. There were also delays in establishing a wide-area network by a national telecommunication company. However, after informal changes, the project’s desired outcomes were achieved in a cost-effective way. The Nauru Fiscal Sustainability Reform Program PVR noted that major activities and output components, and policy actions were achieved within reasonable timeframes. The PVR for the Solomon Islands Economic Growth and Fiscal Reform Program cited that the reforms necessary for grant release were carried out with few delays and the Ministry of Finance and Treasury achieved all outcomes in a timely manner and diligently updated ADB on program progress, providing evidence that the policy actions had been achieved. The ICM rated the Samoa Community Sanitation Project efficient. The move to a 100% subsidy enabled a prompt start for the septic tank installations, attracting household participation in the pilot, and early finalization of MOUs with the households. Significant cost savings (labor and materials) were achieved through the selection of prefabricated plastic septic tanks of international standard as opposed to the construction of concrete septic tanks, which allowed for procurement and installation of 300 additional septic tanks. Despite the 10-month delay in the initial recruitment of the sanitation scheme coordinator, all project activities as planned were completed within the original project period. 47. Ongoing and new projects include water and sanitation projects and urban projects in several countries, together with a basic education project in FSM and RMI; and a new regional health program in Samoa, Tonga, Tuvalu, and Vanuatu focusing on new vaccines. Several of the ongoing water supply and urban development projects have run into implementation difficulties and delays, mostly reflecting implementation capacity weaknesses and often poor initial design and costings. The water and sanitation project in Kiribati faced weak institutional capacity, resulting in project delays in recruiting individual national consultants and in undertaking capacity development and community engagement activities; and fund disbursement arrangements also created problems (an imprest account was established to overcome this). A project design advance was provided to carry out detailed design and prepare a follow-on project, thereby minimizing contracting delays and speeding up the initial disbursement under the ensuing financing. The Palau (Koror) sanitation project was affected by the withdrawal in 2018 of several implementation consultants, exposing the project to risks from limited construction quality monitoring, limited environmental compliance monitoring, limited community awareness of project issues, and limited implementation of the project’s gender awareness plan. The water and sanitation project in Ebeye was flagged as a potential problem project in 2019 because of delayed disbursements, but this was resolved by early 2020. Commencement of the Nuku'alofa Urban Development Sector Project in Tonga was delayed by 8 months due to the late promulgation of the National Spatial Planning Management Act, which was a condition for the engagement of project implementation consultants; subsequently, mis-procurement on the first round of bidding on a subproject delayed commencement by a year. The Port Vila Urban Development Project (Vanuatu) has suffered implementation delays, partly because of capacity constraints within the Department of Works including lack of familiarity with ADB processes and

86 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

procurement procedures, but also because of the limited availability of aggregates for the double bituminous sealing treatment works. The new vaccines program has adopted a regional approach to strengthening critical components of health systems for improved immunization outcomes; this is expected to lead to improved effectiveness through cost savings and shared information. 48. The validation assesses the performance of the program related to this strategy objective less than efficient, primarily because of significant implementation delays in the infrastructure projects.

4. Sustainability of the three strategic priorities and investments 49. Reducing Costs. A PVR downgraded the Kiribati Road Rehabilitation Project to less than likely sustainable because of uncertainties about O&M funding. The Solomon Islands Sustainable Transport Infrastructure Improvement Program is building capacity and improving systems for O&M to help improve the sustainability of infrastructure projects in the Solomon Islands. The PVR rated the project likely sustainable based on the government’s commitment to the approach, institutional strengthening, and significant work undertaken on asset management. A financial sustainability assessment prepared at project completion concluded that funding from the project would be adequate to support the investments required for maintenance and capacity building. The PIC-11 continue to grapple with persistent challenges associated with economies of scale and geographic remoteness. The impact of COVID-19 and associated border closures is likely to increase the already high cost of doing business in the region and adversely impair the potential sustainability of the current and mature program of support. The validation assesses the performance of the program related to this strategy objective less than likely sustainable. 50. Managing risks. Sustainability of the reform programs under the managing risks strategic objective varies from country to country, depending upon both institutional capacity and government commitment; but by reducing risk, the likelihood of sustainability improves. Adapting to climate change, including climate proofing infrastructure investments, increases the likelihood of sustainability. DRM initiatives and the disaster response facility will improve countries’ ability to mitigate and respond to disasters; this will strengthen rehabilitation and improve the sustainability of resources. However, many activities under strategic objective 2 include infrastructure and, as with the strategic priorities of reducing costs and enabling value creation, face O&M issues. The validation assesses the performance of the program related to this strategy objective less than likely sustainable. 51. Enabling value creation. The PVR for the Nauru Fiscal Sustainability Reform Program rated the program likely sustainable. Despite putting in place the regulatory and institutional framework, challenges remain in the public finance sector. Weak human resource and institutional capacity persist, while specific policy actions and PFM reforms that will directly support the sustainability of the trust fund are lacking. These issues raise questions as to whether the country will have the long-term fiscal capacity to sustain budget allocations for social services. Although the PVR for the Samoa SchoolNet and Community Access Project assessed the project as unsuccessful, it found that achievements were likely sustainable. Outputs on e-learning are likely sustainable as they are aligned with the national curriculum. ICT competency was included in the national teacher competency framework and in pre-service programs for teachers. Government and development partner support for funding, institutional, and technical provisions will likely continue. The ICM for the Samoa Community Sanitation Project noted that the pilot achieved the goal to mobilize widespread community and government stakeholder support, and to establish confidence in government-driven implementation processes. While there is a clear government desire to continue with the national expansion, it is limited by financial resources. The Solomon Islands Economic Growth and Reform Program faced challenges with weak government commitment, with frequent changes in leadership making sustained reform difficult. The PVR notes that the government’s commitment for reforms was weak in the absence of development partner support. Low government capacity, coupled with frequent turnover of leadership, makes ongoing and sustained reform difficult, which is why ADB used a single tranche rather than a longer-term multitranche policy-based loan (PBL).

Appendix 7: Analysis of Performance against the Three Strategic Objectives 87

The validation assesses the performance of the program related to this strategy objective as less than likely sustainable.

5. Development impacts of ADB support against the strategic priorities and investments 52. Reducing Costs. The CPSFR cited three projects as examples of development impact, but provided limited evidence: (i) submarine cable projects, which are expected to improve internet connectivity, strengthen planning and delivery of public services, such as in the health care and education, and cut internet costs by half for over 400,000 people; (ii) the renewable energy facility, which is expected to reduce carbon emissions, provide 80 MW of peak installed capacity, including solar, wind, and hydropower, and upgrade 300 kms of distribution system, including connecting rural communities; and (iii) the sustainable transport infrastructure improvement program in the Solomon Islands, which is expected to rehabilitate key transport assets and reduce travel costs. The cable projects are not yet completed, so data is not yet available and thus cannot be validated. The renewable energy facility is ongoing and projects prepared under it are making contributions to the targets cited. While it is too early to validate total achievements, the facility was praised by many during validation interviews. It is too early to validate the likely impacts of the sustainable transport improvement project in the Solomon Islands. 53. PVRs for several transport and energy projects confirmed mixed performance for development impacts. The PVR for the Solomon Islands Transport Sector Development Project, found that the frequency of public transportation increased by 50% to 60%, and the average transport costs for a single trip dropped from SBD25 to SBD10, because of an increase in the number and frequency of pick-up trucks and buses now travelling to the villages. This helped improve access to health services and reduce student absenteeism and dropouts. Improved affordability of transport services resulted in more women accessing transportation services in the community, which were said to have helped them diversify their economic activities, although no evidence was provided. The PVR for the Kiribati road reconstruction project concluded that on the limited and anecdotal information available, the project’s development impact was satisfactory. The PVR for the Solomon Islands Provincial Renewable Energy Project found the project unsuccessful and with unsatisfactory development impacts. Overall, the performance of the program in relation to this strategic priority had less than satisfactory development impacts. 54. Managing Risks. The CPSFR referred to the disaster resilience programs and PSM reforms, noting their importance for managing risks, but without specifics. It noted that disaster financing is supplemented by TA to strengthen the policy environment and institutional arrangements for DRM, which can provide an important safety net for communities in climate-vulnerable countries. PCRs examined during this validation support the qualitative assessment provided in the CPSFR, but they have not been quantified and probably cannot be. Mission discussions in Vanuatu and Tonga on the flood restoration and cyclone Gita restoration projects pointed to positive impacts from the rehabilitation, although data is limited. The PCR for the Solomon Islands flood project reported that the impact objective of restored socioeconomic activities to at least pre-flood levels was met based on GDP growth exceeding pre-flood levels of 3% per annum (GDP growth was 3.2% in 2017, and 3.0% in 2018). It added that the results of the post-project household survey more specifically confirmed improved socioeconomic conditions for the impacted communities. The project rehabilitated or reconstructed damaged infrastructure and reestablished the connectivity of approximately 100 km of the east–west road network on Guadalcanal. Overall, the performance of the program in relation to this strategic priority had satisfactory impacts. 55. Enabling Value Creation. The CPSFR describes outputs achieved through the PSDI, but does not provide examples at the outcome or impact levels. The report also cited the Ebeye Water Supply and Sanitation Project and the Nuku’alofa Urban Development Sector Project, noting that the incidence of waterborne diseases in Ebeye has decreased by 37% since the reverse osmosis plant was commissioned in September 2017. The CPSFR did not cite the Nauru Fiscal Sustainability Program (included under this

88 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

objective); however, the PVR rated its development impact as satisfactory because the program will contribute to the improvement of the sustainable quality of life for Nauruans through improved PFM and utilities management, and the establishment of the intergenerational trust fund. The CPSFR could have cited the Solomons Islands Economic Growth and Fiscal Reform Program, which the PVR rated as having satisfactory development impacts since the policy actions accomplished by the program are likely to have positive development impacts (the PVR did not give figures). The PVR for the regional Higher Education in the Pacific Investment Program assessed the development impact of tranche 1 satisfactory, noting that while it was too early to assess its long-term impact, the new campus itself is likely to have a number of direct benefits. In addition, in the longer term, the larger pool of qualified graduates and postgraduates in more diverse study areas, resulting from the expanded online access to courses, will produce a more educated population and professional workforce that is better able to contribute to the Kiribati economy. The CPSFR did not cite the PVR on the Samoa SchoolNet and Community Access Project, which assessed development impact less than satisfactory. The targeted project themes were related to inclusive social development and capacity development, and the PVR found it challenging to attribute all achieved and in-progress outcomes under the project to the intended impact of a more equitable and effective ICT-enhanced education system and the promotion of lifelong learning. Overall, the performance of the program in relation to this strategic priority had satisfactory impacts.

APPENDIX 8: COMPLETED PROJECTS AND OVERALL VALIDATION RATINGS

Country Project Name

PCR Overall Rating

PCR Relevance

PCR Effectiveness

PCR Efficiency

PCR Sustainability

PVR Overall Rating

PVR Relevance

PVR Effectiveness

PVR Efficiency

PVR Sustainability

PVR Development

Impact

Samoa SchoolNet and Community Access Project

Successful Relevant Effective Efficient Likely sustainable

Less than successful

Less than relevant

Less than effective

Efficient Likely sustainable

Less than satisfactory

Strategic Objective: Reducing Costs Federated States of Micronesia

Yap Renewable Energy Development Project

Successful Highly relevant

Effective Less than efficient

Likely sustainable

- - - - - -

Nauru Electricity Supply Security and Sustainability Project

Highly successful

Highly relevant

Highly effective

Highly efficient

Likely sustainable

Successful Relevant Highly effective

Efficient Likely sustainable

Highly Satisfactory

Samoa Power Sector Expansion Project

Successful Highly relevant

Effective Efficient Likely sustainable

- - - - - -

Solomon Islands

Provincial Renewable Energy Project

Unsuccessful

Relevant Ineffective Inefficient Unsustainable

Unsuccessful

Relevant Ineffective Inefficient Unlikely sustainable

Unsatisfactory

Kiribati Road Rehabilitation Project (with additional financing)

Successful Relevant Effective Efficient Likely sustainable

Successful Relevant Effective Efficient Less than likely

sustainable

Satisfactory

Solomon Islands

Transport Sector Development Project

Successful Relevant Effective Less than efficient

Likely sustainable

Less than successful

Relevant Less than effective

Less than efficient

Likely sustainable

Satisfactory

Strategic Objective: Managing Risks Tonga Cyclone Ian

Recovery Project

Highly successful

Highly relevant

Highly effective

Efficient Likely sustainable

- - - - - -

90 Pacific Approach: Validation of the Country Partnership Strategy Final Review, 2016–2020

Country Project Name

PCR Overall Rating

PCR Relevance

PCR Effectiveness

PCR Efficiency

PCR Sustainability

PVR Overall Rating

PVR Relevance

PVR Effectiveness

PVR Efficiency

PVR Sustainability

PVR Development

Impact

Samoa Fiscal Resilience Improvement Program (Subprograms 1 and 2)

Less than successful

Relevant Less than effective

Less than efficient

Likely sustainable

Less than successful

Less than relevant

Less than effective

Less than efficient

Likely sustainable

Solomon Islands

Transport Sector Flood Recovery Project

Successful Relevant Effective Highly efficient

Likely sustainable

- - - - - -

Strategic Objective: Enabling Value Creation Nauru Fiscal

Sustainability Reform Program

Successful Highly relevant

Effective Efficient Likely sustainable

Successful Relevant Effective Efficient Likely sustainable

Satisfactory

Solomon Islands

Economic Growth and Fiscal Reform Program

Successful Relevant Effective Efficient Likely sustainable

Successful Relevant Effective Efficient Less than likely

sustainable

Satisfactory

Samoa Community

Sanitation Project

Successful Highly relevant

Effective Efficient Likely sustainable

- - - - - -

REG Kiribati

Higher Education in the Pacific Investment Program - Tranche 1

Successful Relevant Effective Efficient Likely sustainable

Successful Relevant Effective Efficient Likely sustainable

Satisfactory

PCR = project completion report, PVR = project completion report validation report Note that some investments appear against multiple strategic priorities. Source: Independent Evaluation Department.

APPENDIX 9: ADB SUPPORT FOR CLIMATE CHANGE MITIGATION, CLIMATE CHANGE ADAPTATION AND DISASTER RISK MANAGEMENT DURING THE COUNTRY PARTNERSHIP STRATEGY

Proportion of Sovereign Operations Supporting Climate Change Mitigation during 2016-2019

Year

Climate Change Mitigation Investments PIC-11 Portfolio

Proportion to Total Portfolio (%)

Number Amount

Number Amount

Number Amount ($ million) ($ million) 2016 2 4.24 13 100.44 15 4 2017 2 6.14 11 72.9 18 8 2018 1 6.18 14 153.92 7 4 2019 6 79.2 18 284.24 33 28 2016–2019 11 95.76 56 611.5 20 16

Note: Total Portfolio includes ADB-financed sovereign loan and grants only. Sources: Independent Evaluation Department estimates; ADB eOperations, accessed on 05 March 2020.

Proportion of Sovereign Operations Supporting Climate Change Adaptation during 2016-2019

Year

Climate Change Adaptation Investments

PIC-11 Portfolio Proportion to Total Portfolio

(%)

No. Amount

No. Amount

No. Amount

($ million) ($ million) ($ million)

2016 1 0.77 13 100.44 8 1

2017 1 1.7 11 72.9 9 2

2018 5 20.19 14 153.92 36 13

2019 10 58.41 18 284.24 56 21

2016–2019 17 81.07 56 611.5 30 13

Note: Total Portfolio includes ADB-financed sovereign loan and grants only. Sources: Independent Evaluation Department estimates; ADB eOperations, accessed on 05 March 2020.

Proportion of Sovereign Operations Supporting Disaster Risk Management during 2016-2019

Year

DRM Investments PIC-11 Portfolio Proportion to Total Portfolio (%)

No. Amount

No. Amount

No. Amount ($ million) ($ million)

2016 3 31.2 13 100.44 23 31

2017 2 23.2 11 72.9 18 32

2018 4 28.8 14 153.92 29 19

2019 6 68.28 18 284.24 33 24

2016–2019 15 151.48 56 611.5 27 25

DRM = Disaster Risk Management, PIC-11 = 11 small islands in the pacific Note: Total Portfolio includes ADB-financed sovereign loan and grants only. Sources: Independent Evaluation Department estimates; ADB eOperations, accessed on 05 March 2020.

APPENDIX 10: OVERALL PORTFOLIO RATING: PERCENTAGE OF PROJECTS AT IMPLEMENTATION RISK, 2014–SEP 2019

Country/ Group 2014 2015 2016 2017 2018 Sept 2019 COO 0 0 0 0 100 0 FSM 67 50 100 50 50 50 KIR 50 0 0 100 0 0 NAU 0 100 0 0 0 0 PAL 50 50 50 50 50 0 RMI 100 33 50 67 33 20 SAM 50 0 40 75 40 0 SOL 0 25 40 20 25 20 TON 17 20 0 60 17 17 TUV 0 0 100 0 0 0 VAN 50 33 25 29 33 50 Average in PIC -11 35 28 37 41 32 14 PARD-wide 36 27 35 43 27 nd ADB-wide 20 24 20 27 25 35

ADB = Asian Development Bank, COO = Cook Islands, FSM = Federated States of Micronesia, KIR = Kiribati, NAU = Nauru, nd = no data, PAL = Palau, PARD = Pacific Department, PIC-11 = 11 smaller Pacific island countries, RMI = Republic of the Marshall Islands, SAM = Samoa, SOL = Solomon Islands, TON = Tonga, TUV =Tuvalu, VAN = Vanuatu. Source: Procurement, Portfolio, and Financial Management Department (PPFD) Portfolio Management Indicators 2014–Sep 2019.

APPENDIX 11: CONTRACT AND DISBURSEMENT PERFORMANCE FOR PIC-11 COUNTRIES, 2014 TO SEPTEMBER 2019 (BASED ON COMMITMENT)

Indicators 2014 2015 2016 2017 2018 Sept 2019 Contract Award Ratioa,b (%) Cook Islands - 17.8 37 78.5 20.5 63.5 Federal States of Micronesia 27.4 8.5 98.6 4.2 13.4 13.1 Kiribati 46.8 2 45.3 70.3 8 0.6 Nauru - 11.7 87.2 0 64.5 0.4 Palau 13.6 1 76.5 80.1 1.5 25.4 Republic of Marshall Islands - 3.2 56.9 11.3 26.1 4.6 Samoa 17.5 18.3 63.8 4.4 39.6 0.2 Solomon Islands 4.4 7.4 36.9 15.1 39.4 8.7 Tonga 12.2 23.2 58.8 58.1 44.2 6.9 Tuvalu - - 84.3 113.7 2.3 9.2 Vanuatu 0.6 18.4 37.1 27.5 46.3 4.9 Average in PIC-11 17.5 11.2 62 42.1 27.8 12.5 PARD-wide - - - 28 41 - ADB-wide contract award ratio (%) 27.8 26.1 29.7 27.6 25.7 17 Disbursement ratio c (%) Cook Islands 55.7 0 9.5 33.3 20.6 4.8 Federal States of Micronesia 20.6 17.6 58.6 73.9 5.4 5.1 Kiribati 32 26.6 49.1 110.9 68.9 14.2 Nauru 100 0 87.3 57.5 154.6 11 Palau 0 3.6 37.4 33.1 36.4 12.2 Republic of Marshall Islands 8.6 - 9.2 32.5 21.4 10 Samoa 37.9 23.8 17.9 45 33.8 13.1 Solomon Islands 34.2 11.8 39.4 31.4 28.8 17.3 Tonga 15.7 16.3 46.4 61.2 49.5 45.8 Tuvalu - - 29 343.9 6.9 12.7 Vanuatu 4.7 12 18.7 28.2 29 16.1 Average in PIC-11 30.9 12.4 36.6 77.4 41.4 14.8 PARD-wide - - - 27 17 - ADB-wide disbursement ratio (%) 25.7 29.5 27.3 25.8 27.7 15.3

ADB = Asian Development Bank, PARD = Pacific Department, PIC-11 = 11 smaller Pacific island countries Note: The portfolio is based on commitments (signing). Data on regional department-wide indicators are rounded as reported in the respective APPRs. Similarly, there is no reported data on these region-wide indicators from 2014 to 2016 and in September 2019. a Contract award ratio does not cover policy-based loans and grants; Disbursement ratio covers investment project loans and grants

only. b Contract award ratio is the ratio of total contracts awarded during the year to the total value for contract awards available at the

beginning of the year, including newly committed projects (loans and grants) during the year. c Disbursement ratio is the ratio of the total disbursements during the year (including disbursement from newly committed

operations during the year) to the undisbursed balance at the beginning of the year. Source: PPFD Portfolio Management Indicators 2014-Sep 2019.

APPENDIX 12: STARTUP COMPLIANCE PERFORMANCE FOR PIC-11 COUNTRIES, 2014 TO SEPTEMBER 2019

Indicators 2014 2015 2016 2017 2018 Sept 2019 Loan: Average time from approval to signing (months)

Cook Islands - 1.7 1 1 4.2 4.2

Federal States of Micronesia 3.9 3.9 3.9 3.9 3.9 5.2 Kiribati 4.9 4.9 4.9 6.5 6.5 6.5 Nauru - - - - - - Palau 4.2 4.2 3.6 3.6 2.9 2.9 Republic of Marshall Islands - - - - - - Samoa 3.1 0.7 0.7 0.4 0.4 0.1 Solomon Islands 1.2 1.2 1.1 1.1 1.2 0.3 Tonga - - 0.3 0.6 1.6 1.6 Tuvalu - - - - - - Vanuatu 10.5 4.4 5.6 4.2 4.2 4.2 Average in PIC -11 4.6 3 2.6 2.7 3.1 3.1 ADB-wide 3.5 3.5 3.4 3.6 3.5 3.4 Loan: Average time from signing to effectivity (months) Cook Islands - 0.9 0.9 1.4 1 1 Federal States of Micronesia 7 7 7 7 7 7.6 Kiribati 3.1 3.1 3.1 1 1 1 Nauru - - - - - - Palau 1.3 1.3 0.7 0.7 0.7 1.3 Republic of Marshall Islands - - - - - - Samoa 4.3 6.3 6.3 3.3 3.3 0.3 Solomon Islands 0.9 6.5 4.5 4.5 0.6 0.6 Tonga - - 0.2 0.7 1.8 1.8 Tuvalu - - - - - - Vanuatu 1.1 1.4 0.8 1.3 1.3 1.3 Average in PIC-11 3 3.8 2.9 2.5 2.1 1.9 ADB-wide 3.4 3.4 3.3 3.2 3.2 3.2 Grant: Average time from approval to signing (months) Cook Islands - 1.7 1.1 1.1 3.3 3.3 Federal States of Micronesia - - - 0.1 0.1 0.1 Kiribati 3.7 5.5 3.3 2.3 2.4 3.4 Nauru - 2.1 1.4 1.8 4.2 4 Palau 0.1 0.1 - - - - Republic of Marshall Islands 0.2 0.4 0.5 0.4 0.3 0.3 Samoa 1.3 1.1 1.2 1.1 1.1 1.1 Solomon Islands 5.4 2.9 1.8 1.6 1.4 1.1

Appendix 12: Startup Compliance Performance for PIC-11 Countries, 2014–September 2019 95

Indicators 2014 2015 2016 2017 2018 Sept 2019 Tonga 2.6 2.1 1.9 1.7 1.5 2 Tuvalu - 2.8 0.6 3 2.3 2.5 Vanuatu 12 3.5 5.6 3.4 3.5 3.5 Average in PIC-11 3.6 2.2 1.9 1.7 2 2.1 ADB-wide 3.1 3 3 3 2.8 2.7

Grant: Average time from signing to effectivity (months) Cook Islands - 0.9 1 1 1.1 1.1 Federal States of Micronesia - - - 3 3 3 Kiribati 1 1.4 1.1 1.2 1 1.1 Nauru - 2.2 1.5 1.6 0.6 0.6 Palau 0 - - - - - Republic of Marshall Islands 0.2 0.9 1.1 0.7 1.7 1.6 Samoa 3.1 3.4 3 2.8 2.6 1.9 Solomon Islands 1.6 4.1 3.4 3.2 1.5 1.6 Tonga 3.2 2.6 2.4 2.2 2.1 2 Tuvalu - 0.2 0.1 3.5 3 3 Vanuatu 2.1 1.4 1.3 1.6 1.6 1.6 Average in PIC-11 1.6 1.9 1.7 2.1 1.8 1.8 ADB-wide 2.3 2.4 2.5 2.6 2.6 2.8

TAa Average time from approval to signing (months) Cook Islands 0 - - - - - Federal States of Micronesia 2.5 1.5 0.7 0.7 - - Kiribati 0.6 0.4 1.1 1.1 0.4 - Nauru 1.4 0 1.5 1.5 1.5 1.5 Palau - - 0.7 0.7 - - Republic of Marshall Islands 1 1 1 1 - -

Samoa 0.7 0.6 0.6 0.6 0.5 0.4

Solomon Islands 1.6 1.7 1.4 1 1 0.8

Tonga 1.1 1.1 - 0.7 0.7 -

Tuvalu 0.5 0.4 0.4 0.6 0.7 0.7 Vanuatu 1.6 2.6 2.6 3.1 1.9 0.8 Average in PIC-11 1.1 1 1.1 1.1 1 0.8 ADB-wide 2.6 2.6 2.5 2.6 2.3 2.2

ADB = Asian Development Bank, PIC-11 = 11 small pacific island countries, TA = technical assistance. Note: - = there is no reported data on this indicator/period. a Includes nonsovereign technical assistance projects. Source: Procurement, Portfolio and Financial Management Department Portfolio Management Indicators 2014-Sep 2019.

APPENDIX 13: REGIONAL TECHNICAL ASSISTANCE

Figure A13.1: Number of TA Capacity Support Projects per Country

FIJ = Fiji, FSM = Federated States of Micronesia, PAL = Palau, PNG = Papua New Guinea, RMI = Republic of the Marshall Islands, REG = regional, SAM = Samoa, SOL = Solomon Islands, TA = technical assistance, TIM = Timor-Leste, TON = Tonga, TUV = Tuvalu, VAN = Vanuatu. Source: Asian Development Bank Data.

Figure A13.2: Workshop and Training Participants by Country

COO = Cook Islands, FIJ = Fiji, FSM = Federated States of Micronesia, KIR = Kiribati, NAU = Nauru, PAL = Palau, PNG = Papua New Guinea, RMI = Republic of the Marshall Islands, REG = regional, SAM = Samoa, SOL = Solomon Islands, TIM = Timor-Leste, TON = Tonga, TUV = Tuvalu, VAN = Vanuatu. Source: Asian Development Bank data

APPENDIX 14: PIC-11 COUNTRIES AT A GLANCE (2016)

Indicator Cook

Islands FSM Kiribati RMI Nauru Palau Samoa

Solomon Islands

Tonga Tuvalu Vanuatu

Land Area (‘000 sq. km) 0.2 0.7 0.8 0.2 0 0.5 2.8 28.4 0.8 0 12.2 Population 15,007 104,600 115,300 55,000 10,800 17,800 195,979 651,700 100,651 11,162 272,459 Population Growth -0.5 0.3 1.3 0.4 1.8 0.3 0.9 2.3 -0.1 1.1 2.3 Urbanization 70.8 22 57 73.8 100 78 19.6 18.6 23 52 25 GDP Per Employed Person (US$)

40,800 14,646 6,084 7,103 26,444 32,549 21,340 4,632 13,535 10,300 8,181

Real per Capita Growth 0.8 -3.9 11 1.3 3.7 19 0.7 5.7 5.3 4 2.7 CPI (Annual Change) -0.1 -0.9 0.4 0 5.1 1.4 1.7 -0.4 8 2.4 3.1 Trade-GDP Ratio 0.4 0.7 0.8 0.9 1 0.8 0.5 0.8 0.6 1 0.6 Trade Balance-GDP Ratio -0.3 -0.4 -0.7 -0.3 -0.8 -0.7 -0.4 0 -0.5 -1 -0.5 Annual Tourists 161,362 29,600 6,600 5,336 2,991 122,050 157,515 25,709 86,579 1,416 332,659 Basic Needs Poverty 28.4 41 21.8 52.7 24 24.9 18.8 12.7 22.5 26.3 12.7 Poverty Gap Ratio 8.5 15 7.2 6.1 6.6 4.9 3.2 7.7 6.2 5.6 Poorest Quintile 9.8 9.3 7.8 3.3 12.2 4 9.8 4.6 10 7.5 7.4 ECCE Net Enrolment Ratio 97.4 69.4 78.1 28 39 71 43 NER-Primary 100 88.8 98.6 79 75.9 87.1 101 92 90 84 86 NER-Secondary 80.6 34 77.3 44.8 55.4 45 67 29 79 56 35 Literacy Youth % 96 95.7 98.5 98 96.5 99.8 98 89.5 99.4 98.6 92.1 Labour Force PR 65.6 49.3 62.4 30.9 65.6 76.9 60.8 73.8 53.5 52.3 84.9 Unemployment Rate 1.3 10.6 37.5 32.6 12.7 0.1 0.3 0.7 1 9.5 3.5 Govt Exp Education % Total 12.4 6.9 10.5 20 5.3 11.4 18.5 32 12.4 17.6 24 Govt Exp Health % Total 11 20.6 9.2 20.1 6.9 17.6 13.8 12.7 7.7 11.8 14.2 Health Exp Per Capita 685 333.3 134 392.3 672 912 180.6 73.9 174 585 62

CPI = consumer price index, ECCE = early childhood care and education, Exp = expenditure, GDP = gross domestic product, Govt = government, NER = net enrolment ratio, PR = participation rate, sq. km = square kilometers. Source: Secretariat of the Pacific Community: National Minimum Development Indicators.

APPENDIX 15: PIC-11 COUNTRIES AT A GLANCE (2020)

Indicator Cook

Islands FSM Kiribati RMI Nauru Palau Samoa

Solomon Islands

Tonga Tuvalu Vanuatu

Land Area (‘000 sq. km)

0.2 0.7 0.8 0.2 0 0.5 2.8 28.4 0.8 0 12.2

Population (‘000) 18.6 102.6 113.0 54.6 11.4 17.5 197.7 667 99.6 11.6 284.6 Population Growth 4.6 0.1 -0.1 0.4 1.6 -0.2 0.7 2.1 -0.5 1.2 2.2 Population density(persons/km2)

78 146 156 301 541 42 71 21 153 445 23

Urban population (% of total)

- 22.6 54.1 77 100 - 19 3.7 22.8 - 25.0

Income and Growth GDP $ million 367.5 418.0 183.3 230.0 118.1 485.7 850.0 1,411.4 503.8 42.4 927.5 GDP Per Capita $) 19,139 4,098 1,587 4,198 9,297 26,085 4,231 2,060 4,793 3,661 3,196 GDP growth per capita (av 2018-19)

7.1 1.6 2.4 3.7 3.4 (0.8) 0.6 3.2 1.6 4.2 2.8

CPI (% Change) 0.8 0.2 1.0 0.1 3.9 0.6 2.2 1.6 4.1 3.3 2.5 Government Finance (% GDP) Revenue 42.4 81.9 123.9 66.0 141.6 26.0 31.8 39.6 44.2 133.3 38.2 Expenditure 38.9 59.6 131.9 63.0 125.6 25.6 29.1 41.7 41.5 143.1 31.4 Overall fiscal surplus (deficit)

3.4 22.3 (8.0) 3.0 16.0 0.4 2.7 (2.0) 2.7 (9.8) 6.8

Others Merchandise trade balance (% GDP)

(32.8) (34.2) (60.2) (29.0) (47.1) (27.1) 35.2 (2.5) (46.5) (61.6) (29.1)

Current account balance (% GDP)

3.6 3.3 7.6 7.7 5.0 (11.8) 2.3 (8.5 (6.8) (6.9) 2.7

External debt service (% exports)

6.8 - 4.5 8.5 28.5 9.0 8.6 7.4 8.3 12.4 4.3

Ext. debt (% GDP) 21.5 - 22.2 31.5 28.7 18.0 46.9 6.9 34.1 22.0 39.5 Social Data Poverty Gap Ratio 8.5 15 7.2 6.1 6.6 4.9 3.2 7.7 6.2 5.6 Poorest Quintile 9.8 9.3 7.8 3.3 12.2 4 9.8 4.6 10 7.5 7.4 NER-Primary 100 88.8 98.6 79 75.9 87.1 101 92 90 84 86 NER-Secondary 80.6 34 77.3 44.8 55.4 45 67 29 79 56 35 Literacy Youth % 96 95.7 98.5 98 96.5 99.8 98 89.5 99.4 98.6 92.1 Unemployment Rate 1.3 10.6 37.5 32.6 12.7 0.1 0.3 0.7 1 9.5 3.5 Govt Exp Educ % 12.4 6.9 10.5 20 5.3 11.4 18.5 32 12.4 17.6 24 Govt Exp Health % 11 20.6 9.2 20.1 6.9 17.6 13.8 12.7 7.7 11.8 14.2 Health Exp PC 685 333.3 134 392.3 672 912 180.6 73.9 174 585 62 CPI = consumer price index, Exp = expenditure, Ext = external, GDP = gross domestic product, Govt = government, NER = net enrolment ratio, PC = per capita, sq. km = square kilometers. Sources: Population and Land Area: ADB Key Indicators 2019 (population 2018); Income and growth: ADB 2020 (ADO Country economic indicators 2019); Social Data from Pacific Community (SPC), SDD, https://www.spc.int/nmdi/ - Population and Development.

APPENDIX 16: RATING OF PACIFIC APPROACH STRATEGIC OBJECTIVES 2016-2020

Strategic Objectives Share Relevance Effectiveness Efficiency Sustainability Development

Impact Overall Rating for Sector Program Reducing Costs 42.0% 2.0 1.0 2.0 1.0 1.0 1.400 Less than Successful Managing Risks 32.0% 2.0 2.0 2.0 1.0 2.0 1.800 Successful Enabling Value Creation 26.0% 1.0 1.0 1.0 1.0 2.0 1.200 Less than Successful Overall strategic objective level scores

100.0% 1.74 1.32 1.74 1.00 1.58 1.42 Less than Successful

Strategic Agendas

Inclusive economic growth

2.0

2.0 2.000 Successful

Environmentally sustainable growth

2.0

1.0 1.500 Successful

Regional cooperation and integration

1.0

1.0 1.000 Less than Successful

Drivers of Change

Knowledge solutions 2.0

2.0 2.000 Successful Partnerships 2.0

2.0 2.000 Successful

Gender equity 1.0

1.0 1.000 Less than Successful Governance and Capacity Development

1.0

1.0 1.000 Less than Successful

Private Sector Development and private sector operations

2.0

1.0 1.500 Less than Successful

Overall thematic scores 1.625 1.375 1.500 Less than Successful Weighted score 1.683 1.320 1.740 1.000 1.478 1.444 Less than Successful Overall rating for ADB country program

Relevant Less than

Effective Efficient Less than

Likely Sustainable

Less than Satisfactory

Less than Successful

Less than Successful

Note: Strategic objectives share is based on the total amount of projects approved, on-going, and/ or completed during 2016–2020, as shown in Pacific Approach CPSFR. Source: Asian Development Bank Independent Evaluation Department.