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Strengthening Social Accountability Mechanisms for Food Security and Agricultural Development: A Look at the Asian Development Bank (ADB) A Scoping Study PhilDHRRA and Binadesa in partnership with AsiaDHRRA and with support ANSA-EAP AsiaDHRRA, Binadesa, PhilDHRRA

Strengthening Social Accountability Mechanisms for Food ......STRENGTHENING SOCIAL ACCOUNTABILITY MECHANISMS FOR FOOD SECURITY AND AGRICULTURAL DEVELOPMENT: A LOOK AT THE ASIAN DEVELOPMENT

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Page 1: Strengthening Social Accountability Mechanisms for Food ......STRENGTHENING SOCIAL ACCOUNTABILITY MECHANISMS FOR FOOD SECURITY AND AGRICULTURAL DEVELOPMENT: A LOOK AT THE ASIAN DEVELOPMENT

Strengthening Social Accountability Mechanisms for Food Security andAgricultural Development: A Look at the Asian Development Bank (ADB)

A Scoping Study

PhilDHRRA and Binadesa in partnership with AsiaDHRRA and with support ANSA-EAP

AsiaDHRRA, Binadesa, PhilDHRRA

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Introduction 5Methodology And Limitations Of The Study 7The Asian Development Bank 9ADB, Food Security, and the Agriculture Sector 19Monitoring of ADB Projects on Food Security and Agriculture 23Civil Society Participation 39Main Findings 43Monitoring Indicators 45Conclusions 49Annexes 51Annex A 53

Case Study (Philippines): Agrarian Reform Communities Project (ARCP) 53

Annex B 63Case Study (Indonesia): Poor Farmer Income Improvement through Innovation Project (PFIIP) 63

contents

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Strengthening Social Accountability Mechanisms for Food Security and Agricultural Development:A Look at the Asian Development Bank (ADB)

A Scoping Study

May 2010

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The World Food Summit of 1996 defined food security as existing “when all people at all times have access to sufficient, safe, nutritious food to maintain a healthy and active life8. Commonly, the concept of food secu-

rity is defined as including both physical and economic access to food that meets people's dietary needs as well as their food preferences. Food security is built on three pillars: 1) Food availability – sufficient quantities of food available on a consistent basis., 2) Food access – having sufficient resources to obtain appropriate foods for a nutritious diet, and 3) Food use – appropri-ate use based on knowledge of basic nutrition and care, as well as adequate water and sanitation.

Food sovereignty, on the other hand, emphasizes the rights of people to define their own food policy that is culturally appropriate and ecologically sound. It is an alternative economic and political framework introduced at the World Food Summit in Rome in 1996. Its six principles are food as a basic human rights, agrarian reform, protection of natural resources, reorga-nization of food trade, ending the globalization of hunger, social peace and democratic control. The framework goes beyond food security, noting the necessity of the framework towards achieving said goal and realizing the right to food.

8 The defi nition of food security is culled from the World Health Organization’s website

INTRODUCTION

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6In most developing countries, international financial institutions (IFIs)

such as the World Bank (WB), the Asian Development Bank (ADB), and the United States Agency for International Development (USAID) provides financial support to various programs and projects. This allows the IFIs to have influence, whether direct or indirect, over its member countries’ devel-opment agenda. In addition, the IFIs are also a primary source of develop-ment knowledge and policies. They also play a significant leveraging role, in part precisely because they have a development mandate which makes them by far the largest source of development finance in the world. They are also the standard-setters in international finance, investment, and policies.

Given the potentially strong influence that the IFIs have in shaping the development agenda of its member countries, it is imperative for civil soci-ety organizations (CSOs) to focus their attention in monitoring the priorities of IFIs in terms of their country investments and financing programs in the region. This study is part of an initiative to strengthen social accountability mechanisms for food security and agricultural development. Specifically, the program aims to strengthen the capacity of CSOs to monitor and analyze public expenditure processes of IFIs, in particular, the ADB, and the nation-al agencies focusing on agriculture. This paper will:

1. provide background information on how the ADB operates

2. analyze the ADB’s operations in two pilot countries (the Philippines and Indonesia) focusing on agriculture-related projects

3. in-depth analysis of two ADB projects on agriculture as case study (one per pilot country)

4. CSO participation in ADB processes

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A comprehensive review of literature, including ADB documents and operations manual, and agriculture-related references was conducted. In addition, statistical data gathering, processing, and analysis for

quantitative information were done. In the Philippines, preliminary findings of the study were presented in a Roundtable Discussion (RTD) attended by representatives from selected NGOs and the Department of Agrarian reform (DAR). In addition, the paper has benefited from various consultations with CSOs and key ADB units (e.g., NGO and Civil Society Center, the Agricul-ture, Food Security, and Rural Development Unit, and the Philippines Coun-try Office). The inputs from the various consultations have already been incorporated in this paper.

This study does not intend to provide full and comprehensive infor-mation on the how the ADB works, rather, the paper describes the ADB processes from a CSO’s perspective. An overview of the ADB processes is necessary to put the study into context and to provide an overview of the ADB to those who may embark on similar monitoring in the future. Below are some of the paper’s limitations:

METHODOLOGY AND LIMITATIONS OF THE STUDY

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81. The analysis focused on the projects assisted by the ADB in the two pilot

countries. The study does not focus on ADB’s other programs and opera-tional policies (e.g., safeguards policy, public communications policy, etc).

2. Data are mostly culled from the ADB website and their other references (such as Annual Reports, Operations Manual). Any policies revised or amended after December 2008 have not been included in this study.

3. Filtering was done for projects classified in the Agriculture and Natural Resources (ANR) sector to be able to capture the share of only the agri-culture-related projects in the ADB’s portfolio. Filtering was done care-fully and on the basis that the ANR sector already includes projects for rural infrastructure, agri credit, and other similar agriculture services, as explained in the ANR subsector (see Table 1).

4. The case study for Indonesia shows the result of actual field monitoring of one agriculture project, while for the Philippines’ case study, the accom-plishments and fund utilization of one agriculture project was showcased. The approach of the two countries in monitoring was deliberately differ-ent, as the Philippine study utilized the macro approach while the Indo-nesian study used the micro approach.

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The ADB is an international development finance institution whose mis-sion is to help its developing member countries reduce poverty and im-prove the quality of life of their people8. Headquartered in Manila and

established in 1966, ADB is owned and financed by its 67 members, of which 48 are from the region and 19 are from other parts of the globe. ADB’s main partners are governments, the private sector, NGOs, development agencies, community-based organizations, and foundations.

From 31 members at its establishment in 1966, ADB has grown to encompass 67 members, of which 48 are from within the Asia and Pacific region and 19 outside. The largest shareholders in the ADB are Japan, the Unites States, and China.

The highest decision-making tier at the ADB is its Board of Governors, to which each of ADB’s 67 members nominate one Governor and an Alter-nate Governor to represent them. The Board of Governors meets formally once a year at an Annual Meeting held in a member country. The Governors’ day-to-day responsibilities are largely delegated to the 12-person Board of

8 This section is culled mostly from the ADB’s website

THE ASIAN DEVELOPMENT BANK

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10Directors, which performs its duties full time at the ADB’s headquarter. Fur-ther, the ADB President, under the Board’s direction, conducts the business of the ADB. The President is elected by the Board of Governors for a term of five years and may be re-elected.

Carrying a triple-A credit rating, ADB raises funds through bond issues on the world’s capital markets, it also utilizes its members’ contributions and retained earnings from lending operations. These sources comprise ADB’s ordinary capital resources and account for 74.1% of lending to ADB’s developing member countries (DMCs). Loans are also provided from Spe-cial Funds Resources, financed mostly from contributions of donor members for ADB’s concessional loan and technical assistance (TA) programs.

To fulfill its mission and realize its vision of an Asia and Pacific free of poverty, ADB will follow three complementary strategic agendas, as set out in Strategy 2020, ADB’s long-term strategic framework. Its support will focus on three distinct but complementary development agendas of the region: inclusive economic growth, environmentally sustainable growth, and regional integration. Further, inclusive growth and social development, addressing the environments of the poor, and ensuring that the vulnerable and poor benefit from regional integration are ADB’s specific contributions to poverty reduction in the Asia-Pacific region. In this context, it will focus on five core areas of operation: 1) Infrastructure, 2) Environment, including climate change, 3) Regional cooperation and integration, 4) Finance sector development, and 5) Education. In addition, ADB continues to operate on a more selective basis in health, agriculture, and disaster and emergency as-sistance.

Further, Strategy 2020 identifies drivers of change that will be stressed in all its operations: 1) developing the private sector, 2) encouraging good governance, 3) supporting gender equity, 4) helping developing countries gain knowledge, and 5) expanding partnerships with other development in-stitutions in the private sector and with the community-based organizations.

A. PROJECT CYCLE

The various stages that a project undergoes in its planning and execution, from country programming to project completion and evaluation, is collec-tively known as ADB’s project cycle. Figure 1 shows the project cycle.

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Figure 1. ADB’s Project Cycle

1. Country Partnership Strategy

ADB works with each developing member country to define a medium-term development strategy and operational program, called a country partner-ship strategy (CPS). The CPS is the primary country-specific document in the planning and programming cycle. It is aligned with both the country’s development plan8 and the corporate strategic priorities of the ADB. Thus, the CPS identifies operational areas from the menu of options provided in Strategy 2020 within the framework of a government’s national develop-ment plan, and narrow the focus further within these areas. It also contains a short and focused assessment of how the strategy will support the five drivers of change in the developing member country. The CPS also includes a results framework. Figure 2 on the left shows the CPS framework.

The major steps in formulating a CPS are: 1) initiation, 2) preparation of a CPS initiating paper and initiating meeting, 3) country consultations, 4) Management Committee Meeting (MCM) and subsequent confirmation of the CPS with the DMC government, and 5) the President’s clearance, followed by consideration and general endorsement by the ADB Board of Directors. The CPS timeframe is aligned with the country’s strategic plan-ning cycle. Further adjustments in the timeframe can be made if justified by major economic or political developments. The estimated duration of

8 According to the Paris Declaration on Aid Eff ectiveness (2005), the assistance program of development partners should be aligned on the national development and priorities to achieve better development results. Actual alignment in the preparation of the CPS depends on the quality of country’s development plans, national poverty reduction strategy, availability of results monitor-ing framework, and the strength of statistics/data.

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CPS preparation is 26 to 30 weeks. The upside of revising the guidelines in CPS formulation (effective January 1, 2010) is that it lessened preparation time and required resources9. However, one critique to the revised guide-line is that CSO participation is downplayed. It is within the discretion of the Country Team Leader to conduct consultations with CSOs because no definite guidelines are in place (e.g., representation of all sectors, geographi-cal considerations).

2. Project Preparation

Project preparation involves two phases: identification/preparation and ex-amination. ADB provides grants called project/program preparatory techni-cal assistance (PPTA) to help the government identify and prepare feasible projects. During the early stage of the PPTA, a flagging exercise, called an initial poverty and social assessment, is conducted to identify those peoples who may be beneficially or adversely affected. A technical assistance report is prepared as a recommendation for ADB to finance a technical assistance

9 The CPS working group of the ADB reviewed the relevance, eff ectiveness, and effi ciency of the existing CPS process in 2009 and identifi ed weaknesses in all three areas, thus the need to implement adjustments in the process.

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project. ADB usually hires consultants to work with government counter-part staff to undertake the project's feasibility study. The consultants work closely with the various stakeholders including the government, civil soci-ety, affected people, and other development agencies working in those sec-tors. ADB closely monitors the consultants' work. The draft final report is reviewed at a tripartite meeting attended by representatives of the govern-ment, ADB, and the consultants. During this process, ADB with the govern-ment agrees on an executing agency for the project or program.

During project examination, ADB examines project feasibility, first, through a fact-finding mission and then through an appraisal mission. The fact-finding mission, in consultation with the government and other stake-holders, examines the project's technical, financial, economic, environmen-tal, marketing, and management aspects and potential social impact. De-tailed project risks and sensitivity analyses are carried out to assess viability of the proposed project. Loan terms and conditions for loan effectiveness are discussed to improve sector performance and address key policy issues.

3. Project Appraisal /Approval

Under this phase, five steps are undertaken: 1) appraisal, 2) loan negotiation, 3) board approval, 4) loan signing, and 5) loan effectiveness.

Following the examination in the field, the appraisal mission conducts further field study, analyses and consultation, as required. The mission then prepares a loan proposal report and draws up a draft loan agreement for negotiation. After appraisal, the draft loan agreement and draft project proposal is submitted to all parties involved including the Government for review. Feedback is collected, and the Government is then called for nego-tiation with ADB. After negotiations with the government, the loan proposal is submitted to ADB's Board of Directors for approval. This report is known as the Report and Recommendation of the President (RRP). After Board approval, the document is sent to the borrowing country's Government for cabinet authorization. Following the authorization from the cabinet, the loan agreement is signed by ADB's President and the Representative of the Government. The loan takes effect once certain conditions are met. This is also known as loan effectiveness. Generally, the conditions are limited to the legal requirements such as legal opinion, cross-effectiveness of co-financing,

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14and execution of subsidiary loan agreements. The requirements and dead-line for loan effectiveness are stipulated in the loan agreement. ADB's legal counsel and Project Officer review if the conditions are met, after which the loan is formally declared effective. Normally, loan documents allow 90 days for the loan agreement to become effective.

4. Project Implementation

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

Project consultants are recruited as needed to assist the Government. For example, in an infrastructure project, the detailed engineering design and bidding documents are prepared, machinery and equipment are pro-cured, and civil works are constructed and installed. The preparatory work for construction, which may take 6 to 12 months or longer, includes: 1) re-cruiting consultants, 2) preparing tender documents and detailed designs, 3) procuring equipment, and 4) selecting contractors for construction. These activities are encouraged to be completed prior to loan negotiation, except signing of contracts, to minimize any start-up delays in project implementa-tion. As such, ADB promotes advance procurement action, that is, recogniz-ing that preparing tender documents, and establishing a project implement-ing unit with key staff are important part of the project readiness activities. Advance recruitment of consultants for loan projects is a normal procedure and does not require advance approval from the Management.

ADB's project divisions review the physical implementation progress as well as monitor achievement of development objectives in close coordi-nation with the borrower and the executing agencies. ADB disburses the loan for approved expenditures, as provided in the loan agreement. Imple-mentation time generally ranges from two to five years but depends on the type and nature of the project. ADB's review missions assess the progress of project implementation by visiting it at least twice a year throughout the implementation period.

If a project has significant environmental or social issues, ADB will often require the borrower to submit regular monitoring reports, in addition to progress reports. Information on the project's implementation progress

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and status of development objectives and loan covenants is added to the project information document during this implementation phase.

5. Project Evaluation

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

Evaluation has changed with ADB. Early work concentrated on input-output relationships in projects, using economic analysis, but evolved to cover the entire results chain of inputs, outputs, outcomes, and impacts. The focus of evaluation studies has shifted from the project to the country, informed by sector and thematic assessments as well as by evaluations of ADB's business processes. The full mix of lending and non-lending services that make up country assistance programs has now become the dominant preoccupation of evaluation, with priority attention to relevance, efficiency, effectiveness, and sustainability.

B. ASSISTANCE TO DEVELOPING MEMBER COUNTRIES

The ADB provides financial support, through low-interest long-term loans, and grants, and professional advice for economic and social development activities. These services are provided to country governments as well as private companies, but are not available to individuals. The types of financial assistance that the ADB offers to its DMCs are: 1) Ordinary Capital Resourc-es (OCR), which are loans usually for 15 to 25 years and have an interest rate set by the market and are made to DMCs with a higher level of economic de-velopment, and 2) Asian Development Fund (ADF), which provides loans to poorer DMCs on concessional terms and grants to poorer DMCs for projects and programs of high development priority. ADF project loans give borrow-ers a longer time to repay the money10 and a very low interest charge, at 1% to 1.5%.

Further, supported projects maybe classified into 10 sectors. The table below shows the revised sectors and its subsectors (2010).

10 They have a 32-year maturity period, including an 8-year grace period during which the borrower does not pay any interest

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No. Sector Subsectors

1 Agriculture and natural resources

Agricultural production and markets; Irrigation, drainage, and fl ood protection; Water-based natural resource management; Land-based natural resource management; Fishery; Forestry; Livestock; Agriculture and rural sector development

2 Education Pre-primary and basic education; Upper secondary education; Tertiary and higher education; Technical education and vocational skills training; Non-formal education; Education sector development

3 Energy Conventional energy; Large hydropower; Renewable energy; Electricity transmission and distribution; Pipelines; Energy utility services; Energy effi ciency and conservation; Energy sector development

4 Finance Banking systems; Money and capital markets; Investment funds; Housing fi nance; Microfi nance; SMW fi nance and leasing; Trade fi nance; Insurance and contractual savings; Finance sector development

5 Health and social protection

Health programs; Health systems; Health fi nance; Nutrition; Early childhood development; Social protection

6 Industry and trade Larger industries; Small-scale industry; Trade and services; Industry and trade sector development

7 Water supply and other municipal infrastructure and services

Water supply and sanitation; Waste management; Slum upgrading and housing; Other municipal services; Urban sector development

8 Public sector management

Economic management and management of public aff airs; Public expenditure and fi scal management; Public administration; Decentralization; Law and judiciary

9 Transport and ICT Air transport; Water transport; Rail transport; Road transport; Urban transport; Transport management and policies; ICT

10 Multisector See subsectors above

Table 1. List of Sectors and Subsectors

Comparing the amount of loans extended by the ADB across all sectors from 2004 to 2008, the top three sectors are Transport and Communica-tions (31%), Energy (18%), and Multisector (15%). In terms of grants, the top three sectors are Multisector (27%), Transport and Communications (22%), and Agriculture and Natural Resources (12%). The least prioritized sector based on loan and grant amounts extended is Industry and Trade.

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Source: ADB Annual Reports, 2004-2008

Source: ADB Annual Reports, 2004-2008

No. Sector 2004 2005 2006 2007 2008 Average Rank

1 Agriculture and Natural Resources

4 5 11 1 4 5 7

2 Education 5 1 3 1 1 2 8

3 Energy 14 18 19 14 23 18 2

4 Finance 6 5 24 11 1 9 5

5 Health, Nutrition, and Social Protection

5 1 0 1 2 2 8

6 Industry and Trade 3 1 0.1 1 2 1 9

7 Law Economic Management, and Public Policy

11 13 3 12 19 12 4

8 Transport and Communications 39 30 19 39 26 31 1

9 Water Supply, Sanitation, and Waste Management

1 11 9 4 4 6 6

10 Multisector 12 15 12 16 18 15 3

Table 2. Loans 2004-2008, in percent

Table 3. Grants 2004-2008, in percent

No. Sector 2004 2005 2006 2007 2008 Average Rank

1 Agriculture and Natural Resources

18 6 24 3 10 12 3

2 Education 5 3 9 9 3 6 6

3 Energy 10 2 1 4 32 10 4

4 Finance 7 0.2 13 0.3 0.1 4 7

5 Health, Nutrition, and Social Protection

3 8 13 5 2 6 6

6 Industry and Trade 5 0.2 0.1 3 1 2 9

7 Law Economic Management, and Public Policy

19 1 2 2 15 8 5

8 Transport and Communications 10 6 25 48 21 22 2

9 Water Supply, Sanitation, and Waste Management

6 2 0 1 7 3 8

10 Multisector 18 71.6 13 25 7 27 1

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ADB’s long-term strategic framework 2008–2020 (Strategy 2020) con-firms the organization’s continued support for agriculture and rural development as an underlying component of its inclusive growth strat-

egy. ADB upholds that ensuring food security and reducing rural poverty are fundamental to achieving inclusive and sustainable economic growth.8

The support that ADB extends to its DMCs includes investments in infrastructure and technology/productivity enhancement measures, as well as policy reform and institution/capacity development. This builds on the productive, social, and environmental assets in the rural sector; broadens ru-ral opportunity; and allows all to participate in and benefit from the region's dynamic growth.

To foster long-term food security, ADB helps improve agricultural pro-ductivity through investments in rural infrastructure, agribusiness develop-ment, rural finance, food supply chain development, agriculture technology development, and irrigation and water resource management.

The kinds of assistance that ADB extends vary. They range from large-scale irrigation projects in Uzbekistan and India to addressing post-conflict agriculture in Afghanistan, and providing value chain improvements in

8 This section is culled mostly from the In Focus Series topic entitled Agriculture, Rural Development, and Food Security

ADB, Food Security, and the Agriculture Sector

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20Mongolia. They also take in market development assistance, such as proj-ect for small farmers and agroprocessors in Nepal that provides access to market information and technology for product improvement, and help for making market-based investment decisions. In addition, ADB works to bring fundamental agricultural reform that provides more rational pricing of food commodities, along with strong social safety nets for the poor and vulner-able. Moreover, environmentally sustainable growth is a primary objective of ADB's Strategy 2020. ADB's agriculture and rural development opera-tions work toward it through climate change adaptation and mitigation, and improved management of environment, water and land.

In terms of strengthening regional cooperation and integration, ADB programs include sharing and advancement of agricultural research, stream-lining agricultural trade, developing biofuel and rural renewable energy, and strengthening coordination of control and prevention of transbound-ary animal diseases. ADB is also helping to improve water management through water-sharing agreements for boundary-crossing rivers, promotion of resource conservation technologies to improve productivity, income, and food security, and building of human-resource capacity in the areas of food quality, safety, standards, and trade.

In sum, Strategy 2020 commits ADB to a results-driven, holistic approach to agriculture and rural development that fosters public and private investments in the rural sector, upgrades people's capacity—with special focus on gender equity, strengthens knowledge development and dissemination, promotes part-nerships with other donors and specialist agencies, and addresses governance issues. To address food security issues, ADB solutions include helping countries introduce fundamental measures to improve agricultural productivity through market and institutional reforms, plus feature support to build infrastructure for meeting expected climate change impacts on agriculture.

As mentioned in the early section of this paper, Strategy 2020, the long-term strategic framework of the ADB, outlines five core areas of operation. Agriculture falls on the “other areas of operation” category, together with health and disaster and emergency assistance. The commitment of ADB for the agriculture sector is stated as follow:

“ADB will support agriculture and rural development mainly through infrastructure for rural transport, irrigation and water systems, and micro-

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21

finance. These efforts will be complemented by natural resources manage-ment and regional cooperation and integration activities, such as those relat-ing to agricultural trade and investment in the Greater Mekong Subregion, through partnerships with specialist development agencies and NGOs.”

According to an evaluation of the ADB’s Long-Term Strategic Frame-work or LTFS (2001-2006),9 there has been decreasing support for the agri-culture and natural resources sector based on the volume and value of loans extended. The number of loans for this sector, which was an important sec-tor prior to the LTSF in terms of the volume of loans, declined from 82 loans in 1995–2000 to 65 loans in 2001–2006. However, an increase in the number of loans to the agriculture and natural resources sector was observed in 2006 in response to demands from the PRC and DMCs in South and South-east Asia. From the table below, it is observed that from 1995-2000, the ANR sector ranks first in terms of the volume of loans. However, the amount of loans falls below other four sectors (Finance, Transport and Communica-tions, Energy, and Multisector). The same observation

9 Special Evaluation Study on Long-Term Strategic Framework: Lessons from Implementation (2001-2006), Operations Evaluation Department, ADB, 2007.

No. Sector1995 – 2000 2001 – 2006

Volume* Rank Value Rank Volume* Rank Value Rank

1 Transport and Communications

16.4 2 19.5 2 17.2 1 31.9 1

2 Energy 10.9 4 16.1 3 10.1 4 13.6 2

3 Agriculture and Natural Resources

18.2 1 9.5 5 14.5 2 8.4 6

4 Finance 10.0 6 22.5 1 8.7 7 9.2 5

5 Industry and Trade 2.7 10 2.4 10 4.7 9 1.7 9

6 Law, Economic Management, and Public Policy

4.7 9 3.4 9 9.8 5 9.9 4

7 Water Supply, Sanitation, and Waste Management

6.7 7 4.8 7 9.2 6 6.5 7

8 Education 10.2 5 5.6 6 8.5 8 3.8 8

9 Health, Nutrition, and Social Protection

5.3 8 4.6 8 3.4 10 1.6 10

10 Multisector 14.9 3 11.5 4 13.9 3 13.3 3

Table 4. Volume and Value of Loans, 1995-2006

* Volume is number of loans

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22The graphs below show the trend of assistance from 2004 to 2008,

through loans and grants, for its various sectors. The thick green line is for the ANR sector, which shows the sharp increase for assistance in 2006.

Figure 3. ADB Loans and Grants per Sector, 2004-2008

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Monitoring of ADB Projects on Food Security and Agriculture

A. ADB PROJECTS IN THE PHILIPPINES

The Philippines’ Country Strategy and Program 2005-2007 (CSP)8 outlined the priority programs and projects for the country. It covered only three years, rather than the usual 5 years, because of the economic uncertainties foreseen in 2005 when it was prepared. In 2007, the ADB and the Govern-ment of the Philippines agreed on an operational program for 2007–2008, which extended the CSP by 1 year through the country operations business plan (COBP) 2007–2008.

The CSP cited six constraints to a more rapid poverty reduction for the country, distilled from the analytical work for preparing the CSP. These are as follow:

1. fiscal imbalance 2. uncertain investment climate 3. inadequate infrastructure4. poor management of assets, land and resources5. weak institutional capacity6. geographical inequalities

8 Preceded the Country Partnership Strategy (CPS)

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24 These six constraints are viewed as fundamental strategic parameters

to identify and define ADB interventions in the country. The six constraints serve as “design criteria” for each intervention that is formulated. In the process of CSP formulation and policy dialogue, ADB developed a set of targeted sector policy reform packages, each of which is expected to have a direct impact on at least one of Philippines’ three most critical binding development constraints: 1) fiscal imbalance, 2) poor investment climate, and 3) weak governance. The ADB focused its policy-based interaction and lending cluster under these three thematic priorities.

As mentioned in the early part of this paper, the ADB aligns its pro-grams on the country’s development plans. For the Philippines, ADB’s programs are aligned with the Medium-Term Philippine Development Plan (MTPDP) 2004-2010. The table below shows the connection of the ADB’s Operational Program with the 10-Point Agenda and MTPDP priorities.

10-Point Agenda and MTPDP Priorities ADB Program

Agenda 1: Balanced Budget by 2009

Fiscal Strength Local Government Financing and Budget Reform SDPImproving Risk Management of Public Sector Debt TA

Financial Sector Financial Markets Regulation and Intermediation SDPStrengthening Anti-Money Laundering Regime, Phase II TAFinancial Markets Regulation and Reform TA

Power Sector Reforms Power Sector Development Program

Anticorruption Governance and Judicial reform ProgramStrengthening the Civil Service and Governance of LGUs TA

Bureaucratic Reforms Local Government Financing and Budget Reform SDPStrengthening the Civil Service and Governance of LGUs TAHarmonization and Managing for Development Results TASupport for Health Sector Reform TA

Agenda 2: Education for All

Education

Agenda 3: Automated Elections

National Harmony: Automated Elections

Agenda 4: Transportation and Digital Infrastructure

Infrastructure Rural Roads Development

Trade and Investment

Table 5. Alignment of ADB’s Programs and the MTPDP 2004-2010

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Source: CSP 2005-2007

10-Point Agenda and MTPDP Priorities ADB Program

Agenda 5: Terminate Hostilities

National Harmony: The Peace Process Support to the Mindanao Peace Process

Basic Need: Peace and Order

Rule of Law Governance (Judicial and Justice System Reform) SDP

Agenda 6: Heal Wounds of EDA 1, 2, 3

National Harmony: Healing the Wounds of EDSA

Agenda 7: Electricity and Water for All

Infrastructure Angat Water Utilization and Aqueduct Improvement

Energy Independence

Power Sector Reforms Power Sector Development Program

Responding to Basic Needs of the Poor

Agenda 8: Opportunities for 10 million Jobs

Trade and Investment Financial Markets Regulation and Reform TA

Agribusiness Strategy for Development of Upland Communities in Southern PhilippinesStrategy for Sustainable Aquaculture Development for Poverty Reduction

Financial Sector SME Development Support

Labor Microfi nance Development Program

Responding to Basic Needs of the Poor Strategy for Development of Upland Communities in Southern PhilippinesStrategy for Sustainable Aquaculture Development for Poverty ReductionIntegrated Coastal Resources ManagementIrrigation Rehabilitation TA

Science and Technology

Agenda 9: Decongest Metro Manila

Infrastructure

Responding to Basic Needs of the Poor Metro Manila Urban Services for the Poor (Project and TA)

Agenda 10: Develop Subic-Clark as Logistics Hub

Trade and Investment

Infrastructure

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26The focus of the lending program for the Philippines is shown in the

milestones for the CSP 2005-2007 in the figure below. It clearly depicts that the CSP is geared towards improving the fiscal outlook and investment climate, and downplays important issues such as food security, education, and health.

Figure 4. Milestones for the CSP

In 2008, ADB and the Government agreed on an operational program for 2009–2010, which would extend the CSP by 2 more years through a Country Operations Business Plan (COBP) 2009–2010. The CSP retains its strategic focus on fiscal consolidation, an improved investment climate, and accelerated attainment of the Millennium Development Goals (MDGs), as confirmed by the country assistance program evaluation (CAPE) for the Philippines and the ADB study on the critical development constraints in the country. Importantly, extending the CSP to 2010 will align the cycle of the country partnership strategy with the Government’s planning cycle.

The COBP 2010–2012 is closely aligned with the Strategy 2020 of ADB. Of the five core areas of operation in the strategy, four—infrastructure, envi-

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Table 6. List of Assistance Pipeline in ANR Sector for Lending and Non-lending Products, 2010-2012

No. Program Name YearType of Financing/

AssistanceTotal Cost (US$)

1 Integrated Natural Resources and Environmental Management

2010 Firm loan 120 million

2 Irrigation Systems Operation Effi ciency Improvement

2010 Firm loan 100 million

3 Supporting Irrigation Reforms 2010 Capacity building technical assistance (CDTA)

800,000

4 Decentralized Framework for Operations and Maintenance of Rural Infrastructure

2010 Capacity building technical assistance (CDTA)

800,000

5 Comprehensive Development for the Agusan River Basin Project (formerly Agusan Integrated Water Resources Management)

2011 Firm loan 100 million

6 Rural Infrastructure for Agribusiness Development Project

2011 Firm loan 80 million

7 Rural Infrastructure Development Project

2011 Project preparatory technical assistance (PPTA)

800,000

8 Rural Infrastructure Development Project

2012 Firm loan 100 million

9 Integrated Coastal Resource Management Project II

2012 Firm loan 100 million

10 Mindanao River Basin Project 2012 Firm loan 100 million

ronment, financial sector development, and education—are covered by the proposed lending program. 7 projects and 3 technical assistance for the ANR sector are in the pipeline.8 In terms of value, total amount of assistance for the ANR sector is US$702.4 million or 25% of total assistance.

Looking at the approved ADB projects in the Philippines from 1990 to 2009, there were 346 projects, of which only 34 or 10% are agriculture-related. To generate this analysis, projects that are classified under the ANR sector were screened and only the projects related to agriculture were retained. Volume of agriculture-related projects is highest in the years 1993, 1996, and 2000.

8 To avoid double counting, standby loans are not included in the list. Only fi rm loans are included in the computation of loan values.

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YearTotal no.

of projects

No. of agri

sector projects

% from

totalSector with highest %

1990 33 4 12% 1) Transport and communications, 2) Water supply, sanitation, and waste management

1991 26 4 15% Natural resources

1992 19 1 5% 1) Finance, 2) Natural resources

1993 23 4 17% 1) Agriculture, 2) Energy, 3) Health, nutrition, and social protection

1994 17 2 12% Water supply, sanitation, and waste management

1995 25 2 8% Health, nutrition, and social protection

1996 21 4 19% Agriculture

1997 19 2 11% Law, economic management, and public policy

1998 22 2 9% 1) Law, economic management, and public policy, 2) Multisector (excluding agriculture)

1999 13 2 15% Law, economic management, and public policy

2000 23 4 17% 1) Agriculture, 2) Natural resources

2001 11 0 - 1) Finance, 2) Law, economic management, and public policy

2002 15 0 - Law, economic management, and public policy

2003 10 0 - 1) Energy, 2) Finance, 3) Multisector (excluding agriculture)

2004 17 1 6% Finance

2005 13 0 - Industry and trade

2006 9 0 - Finance

2007 7 0 - Law, economic management, and public policy

2008 17 2 12% Law, economic management, and public policy

2009 6 0 - 1) Energy, 2) Health, nutrition, and social protection

Total 346 34 10% Law, economic management, and public policy

Table 7. Volume of ADB Projects in the Philippines per year, 1990-2009

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Table 8 below shows the list of all agriculture-related projects approved by ADB from 1990 to 2009. The projects are in the form of loans and technical assistance.

Table 8. List of agriculture-related ADB Projects in the Philippines, 1990-2009

No. Name of Project Type Amount (in US$)Date

approved

1 Agrarian Reform Communities Project II

Loan 70,000,000 27 Oct 2008

2 Irrigation System Operation Effi ciency Improvement Project

Technical Assistance 1,000,000 30 Sep 2008

3 Agrarian Reform Communities II Technical Assistance 250,000 14 Sep 2004

4 Grains Sector Development Program - Project Loan*

Loan 75,000,000 24 Apr 2000

5 Grains Sector Development Program - Program Loan*

Loan 100,000,000 24 Apr 2000

6 Grains Policy and Institutional Reforms

Technical Assistance 630,000 24 Apr 2000

7 Review of Cost Recovery Mechanisms for National Irrigation Systems

Technical Assistance 300,000 4 Aug 1999

8 Infrastructure for Rural Productivity Enhancement Sector Project

Technical Assistance 800,000 15 May 1999

9 Southern Philippines Irrigation Sector

Loan 60,000,000 18 Dec 1998

10 Agrarian Reform Communities Loan 93,162,000 18 Dec 1998

11 Southern Philippines Irrigation Sector

Technical Assistance 600,000 13 Aug 1997

12 Agrarian Reform Communities (DAR) Technical Assistance 253,000 12 Mar 1997

13 Cordillera Highland Agricultural Resource Management

Loan 9,500,000 11 Jan 1996

14 Cordillera Highland Agricultural Resource Management

Loan 9,500,000 11 Jan 1996

15 Institutional Capacity Building for Policy Formulation, Planning, Monitoring and Evaluation for the Agriculture Sector

Technical Assistance 976,000 24 Dec 1996

16 Grains Sector Development Program Technical Assistance 848,000 18 Dec 1996

17 Second Irrigation Systems Improvement

Loan 15,000,000 30 Aug 1995

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30No. Name of Project Type Amount (in US$)

Date

approved

18 Second Irrigation Systems Improvement

Loan 15,000,000 29 Aug 1995

19 Rural Infrastructure Development Loan 17,500,000 10 Nov 1994

20 Western Visayas Agro-Industrial Development

Technical Assistance 822,250 23 Jun 1994

21 Integrated Pest Management for Highland Vegetables

Technical Assistance 600,000 15 Dec 1993

22 Second Highland Agriculture Development

Technical Assistance 550,000 26 Jul 1993

23 Second Irrigation Systems Improvement

Technical Assistance 600,000 11 May 1993

24 Integrated Agriculture Infrastructure and Support Services (Supplementary)

Technical Assistance 28,500 1 Mar 1993

25 Small Farmers Credit Loan 75,000,000 22 Dec 1992

26 Kabulnan Irrigation and Area Development

Loan 48,000,000 28 Nov 1991

27 Assessment of Credit Needs for the Small Farmer Credit Program of the LBP

Technical Assistance 43,000 21 Nov 1991

28 Study on Foodcrop Policies Technical Assistance 400,000 24 Jan 1991

29 Integrated Agriculture Infrastructure and Support Services

Technical Assistance 495,000 21 Jun 1991

30 Irrigation Systems Improvement Loan 20,000,000 8 Nov 1990

31 Irrigation Systems Improvement Loan 9,000,000 8 Nov 1990

32 Mindanao Smallholder Development Technical Assistance 333,000 30 Jan 1990

33 Kabulnan Irrigation and Area Development

Technical Assistance 600,000 3 Dec 1990

34 Agro-Processing and Rural Enterprises

Technical Assistance 295,000 27 Sep 1990

* During the presentation of the study fi ndings in a Forum attended by key ADB staff , it was mentioned by the ADB that the Grains Sector Development Program was cancelled. However, with this information not considered in the data processing, some fi gures in the share of agriculture to the total Philippine portfolio may be underestimated.

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In terms of value, 9% of total assistance to the Philippines or more than US$ 701 million was devoted to the agriculture sector. The biggest share al-located to the agriculture sector was in 2000, at 45% of total loan amount.

Table 9. Value of ADB Projects in the Philippines per year, 1990-2009 (in US$)

YearTotal amount

of projects

Amount of agri

sector projects

% from

totalSector with highest %

1990 709,102,400 29,895,000 4% Transport and communications

1991 301,673,500 48,938,000 16% Finance

1992 359,030,000 75,000,000 21% Energy

1993 349,377,000 1,778,500 1% Energy

1994 144,157,250 18,322,250 13% Transport and communications

1995 577,998,000 30,000,000 5% Energy

1996 328,781,000 20,824,000 6% Transport and communications

1997 349,184,000 853,000 >1% Energy

1998 865,840,000 153,162,000 18% Multisector (excluding Agriculture)

1999 90,340,000 1,100,000 1% Transport and communications

2000 551,066,789 250,630,000 45% Agriculture

2001 112,550,000 0 - Finance

2002 51,195,000 0 - Energy

2003 188,110,000 0 - Finance

2004 457,470,000 250,000 >1% Finance

2005 205,720,000 0 - Finance

2006 657,650,000 0 - Energy

2007 594,950,000 0 - Law, economic management, and public policy

2008 1,040,410,000 71,000,000 7% Law, economic management, and public policy

2009 85,130,000 0 - Health, nutrition, and social protection

Total 8,019,734,939 701,752,750 9% Energy

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32Table 10. Ranking of sectors by volume and value, 1990-2009

Sector Volume % Rank Value (in US$) % Rank

Agriculture 34 10% 4 701,752,750 9% 3

Natural resources 25 7% 6 312,135,500 4% 6

Livestock 1 >1% 11 600,000 >1% 9

Fisheries 6 2% 9 80,083,000 1% 8

Education 19 5% 8 131,109,089 2% 7

Energy 34 10% 3 2,267,106,000 28% 1

Finance 41 12% 2 1,141,860,900 14% 2

Health, nutrition, and social protection

20 6% 7 373,876,000 5% 5

Industry and trade 19 5% 8 158,194,000 2% 7

Law, economic management, and public policy

50 14% 1 1,126,698,200 14% 2

Multisector (excluding Agriculture)

38 11% 3 669,767,000 8% 4

Transport and communications

27 8% 5 735,427,000 9% 3

Water supply, sanitation, and waste management

28 8% 5 314,333,500 4% 6

Uncategorized 4 1% 10 6,792,000 >1% 9

Total 346 8,019,734,939

B. ADB PROJECTS IN INDONESIA

Indonesia is a founding member of the ADB since 1966 and, by the end of 2008, had received 297 loans amounting to US$23.5 billion and 498 TA proj-ects amounting to US$276.6 million. Measured by loan approvals, Indonesia is ADB’s largest client and its second largest recipient of TA support.8

Measured in cumulative ADB lending, 44% of overall lending supported agriculture and natural resources, energy, and transport and communica-tions. From 1998 to 2008, after the Asian financial crisis, lending to the abovementioned sectors decreased to 18%, indicating a shift from project-oriented physical infrastructure support to policy-based lending. Since 1998, almost 50% of ADB lending supported finance and law, economic manage-ment, and public policy.

8 ADB’s Fact Sheet for Indonesia, as of 2008.

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Based on the cumulative ADB lending as of December 2008, the agri-culture and natural resources sector comprised 16% of the total loans. The smallest share was extended to the water supply, sanitation, and waste management sector.

Table 11. Cumulative ADB lending for Indonesia

Sector Loans (no.)Amount (US$

million)%

Agriculture and Natural Resources 92 3,864.29 16.43

Education 32 2,222.35 9.45

Energy 31 3,781.05 16.07

Finance 17 3,121.10 13.27

Health, nutrition, and social protection 13 1,068.30 4.54

Industry and trade 13 650.70 2.77

Law, economic management, and public policy

14 2,509.22 10.67

Multisector 42 3,216.83 13.68

Transport and communications 33 2,713.86 11.54

Water supply, sanitation, and waste management

10 375.60 1.60

Total 297 23,523.30 100.00

Looking at the project success rates (based on aggregate results of proj-ect/program completion, validation, and evaluation reports), the agriculture and natural resources sector has one of the lowest success rates, at only 40%.

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Sector PercentageNo. of rated

projects/programsRank

Agriculture and Natural Resources 40.0 65 8

Education 95.2 21 2

Energy 69.6 23 7

Finance 77.8 9 3

Health, nutrition, and social protection 71.4 7 5

Industry and trade 20.0 5 9

Law, economic management, and public policy

75.0 4 4

Multisector 70.0 20 6

Transport and communications 95.8 24 1

Water supply, sanitation, and waste management

16.7 6 10

Total 63.0 184

Table 12. Project success rates

From 1990 to 2006, 35 agriculture-related projects were assisted by ADB in Indonesia. Total project cost amounts to US$ 1.1 billion. From this amount, US$ 1.07 billion is in the form of loan, US$ 10.3 million were ex-tended for technical assistance, and US$ 15 million was extended as grant.

Table 13. List of agriculture-related ADB Projects in Indonesia, 1990-2006

No. Project TitleDate

approved

Type of

Assistance

Total Fund

(US $)

1 Sustainable Agriculture Development Project in Irian Jaya

24 Oct 1990 Technical Assistance

600,000

2 Preparation of a Marginal Farmer Community Development

26 Oct 1990 Technical Assistance

560,000

3 Agricultural Technology School 13 Nov 1990 Loan 85,000,000

4 Rainfed Agriculture Development Project in Eastern

15 Apr 1991 Technical Assistance

600,000

5 Second Land Resources Evaluation and Planning

19 Sep 1991 Loan 57,000,000

6 Tree Crop Smallholder Sector 14 Nov 1991 Loan 135,000,000

7 Central Java Groundwater Irrigation Development

26 Nov 1991 Loan 51,000,000

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No. Project TitleDate

approved

Type of

Assistance

Total Fund

(US $)

8 Upland Farmer Development 5 Nov 1992 Loan 30,000,000

9 Smallholder Tree Crop Processing Project (STCPP)

12 Nov 1992 Loan 75,000,000

10 Improvement of Farmer managed Irrigation system

28 Dec 1992 Technical Assistance

250,000

11 Study on Enhancing Private Sector in Tree Crop Development

6 May 1993 Technical Assistance

540,000

12 Sustainable Agriculture Development Project in Irian Jaya (SADP)

26 Oct 1993 Loan 28,000,000

13 Second Integrated Irrigation Sector 12 Jan 1994 Loan 100,000,000

14 Second National Estate Crop Protection 16 Sep 1994 Technical Assistance

570,000

15 Sulawesi Rainfed Agriculture Development Project (SRADP)

31 Jan 1995 Loan 30,360,000

16 Participatory Assessment of Agricultural Technology

24 Oct 1995 Technical Assistance

535,000

17 North Sumatera Irrigated Technology Improvement

12 Jun 1996 Technical Assistance

600,000

18 Rural Income Generation 27 Aug 1996 Technical Assistance

493,000

19 Integrated Pest Management for Smallholders Crops Project (IPMSECP)

26 Sep 1996 Loan 44,000,000

20 Agriculture Sector Strategy Review 7 Oct 1996 Technical Assistance

600,000

21 Horticulture and Agribusiness Development

13 Dec 1996 Technical Assistance

600,000

22 Participatory Development of Agricultural Technology

1 Jul 1997 Loan 63,800,000

23 Northern Sumatera Irrigated Agriculture Sector

13 Nov 1997 Loan 130,000,000

24 Rural Income Generation Project 25 Nov 2007 Loan 78,600,000

25 Participatory Approaches to Sustainable Income Generation

29 Nov 1999 Technical Assistance

300,000

26 Agriculture and Rural Sector 29 Nov 1999 Technical Assistance

150,000

27 Sustainable Management for Tree Crop Development

28 Dec 1999 Technical Assistance

950,000

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Date

approved

Type of

Assistance

Total Fund

(US $)

28 Poor Farmer Income Improvement Project 9 Nov 2007 Technical Assistance

420,000

29 Participatory Irrigation Development and Management Sector

12 Dec 2001 Technical Assistance

800,000

30 Agriculture and Rural Development Strategy

12 Mar 2002 Technical Assistance

900,000

31 Poor Farmer Income Improvement through Innovation Project

15 Aug 2002 Loan 56,000,000

32 Productivity Enhancement of Tree Crops 21 Nov 2003 Technical Assistance

800,000

33 Participatory Irrigation Development and Management Sector

18 Dec 2003 Grant 15,000,000

34 Participatory Irrigation Sector Project 19 Dec 2003 loan 73,000,000

35 Sustainable Aquaculture for Food Security and Poverty Reduction

12 Dec 2006 Loan 33,300,000

In its CSP 2006-2009, the identified programs are aligned with the country’s medium-term development plan 2005-2009 (rencana pemban-gunan jangka menengah or RPJM) which aimed to achieve higher levels of pro-poor sustainable growth and the Millennium Development Goals (MDGs). Five areas of engagement had been identified: 1) improved infra-structure and infrastructure services, a deepened financial sector, improved decentralization, accelerated MDG achievement, and strengthened envi-ronmental and natural resource management, with a key thematic focus on governance and anticorruption measures in all operations. Worth noting is that the focal area outlined in the CSP to achieve agricultural development is the development of rural infrastructure, as identified in the CSP’ Results Framework. No direct program or project on the agriculture sector was identified.

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Government’s Medium Term

Development Agenda (RPJM)ADB Strategic Focus

Direction of

InterventionsStrategic Goals Key Constraints CSP Outcomes

Tracking

Indicators

• Natural resource management done on a more sustainable basis, with an economic return for the poor

• Incidence of pollution reduced

• Inadequate natural resource management capacity nationally and locally

• Overlapping mandates and functions of government agencies

• Low awareness among government, the public, and resource users of sustainable resource management

• Increased pressure on natural resources for livelihoods

• Lack of basin-wide integrated water management

• Inadequate rural infrastructure

• Improved management of water resources

• Improved coastal and marine resource management

• Creation of livelihoods and economic opportunities in rural areas

• Well-functioning community-based management of natural resources

• Extent of operational irrigation schemes

• Better water supply

• Reduced fl ood and drought risks

• 6,000 hectares of coral reefs rehabilitated

• 700 hectares of marine protected areas managed in a sustainable manner

• Investments• Water resource

management• Flood

protection• Development

of rural infrastructure

• Coastal resource management

Table 14. CPS Results Framework 2006-2009

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In February 2001, ADB established the NGO and Civil Society Center. Ac-cording to the ADB website, it was created to strengthen cooperation with civil society actors and to respond to their concerns. The Center serves

NGOs, including community-based organizations, people’s groups and foun-dations, as well as trade unions. The Center performs the following tasks:

1. Facilitates integration of cso knowledge and experience into adb opera-tions

2. Remains abreast of issues of concern and areas of work in asia and pacific csos

3. Engages csos in a continuing dialogue, and manages adb's overall commu-nications with civil society

4. Identifies and develops strategic alliances between adb and csos5. Improves adb's institutional capacity to collaborate productively with csos6. Provides resources and guidance to adb staff on consultation and partici-

pation issues.

Civil Society Participation

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40In 2006, the Operations Evaluation Department of the ADB conducted a

“Special Evaluation Study (SES) on the Involvement of Civil Society Or-ganizations in ADB Operations”. The SES identified the typology of CSO involvement, are seen in the table below. In the SES, ADB loans/TAS/JFPR from 1999 to 2004 were analyzed to identify the most frequent involvement of CSOs.

No. Type of Involvement Details Percent

1 General consultation CSOs are consulted on ADB policy and/or projects

23%

2 Information provider CSOs provide specifi c information, which is refl ected in the design or implementation of ADB-assisted activities

10%

3 Policy advocacy work CSOs are substantively involved in the elaboration of ADB policies

3%

4 Cofi nancier CSOs contribute their own staff and/or funding resources to an ADB-assisted activity

3%

5 Benefi ciary CSO is recipient of ADB support, or a participant in ADB-funded training or other capacity building activity

12%

6 Expert, consultant, and/or trainer

CSO is contracted to undertake a specifi c component of an ADB-assisted activity

19%

7 Implementing agency CSO is contracted to implement an ADB-assisted activity

27%

8 Monitoring and evaluation

CSO monitors or evaluates an ADB-assisted activity, including as contractor

3%

Table 15. Type of CSO involvement

One general conclusion of the study is that a more quantifiable and systematic approach to defining CSO participation is required to better cor-relate CSO involvement in ADB operations. As cited in the SES, this phase or level of participation could be demonstrated by using David Wilcox’s modified version of Arnstein’s ladder of civil society participation (Figure 5), which ranges between levels 1 to 5. Participations characterized by levels 3 to 5 are deemed as substantial participation.

The study found out that CSP processes are mostly at level 2 (consulta-tion), with CSO involvement in loan and TA implementations also at level 2

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and some reaching level 3. Level 5 participation is through grants where the ADB provides financial assistance to independent community initiatives.

The study concluded that the ADB’s capacity to engage CSOs in country strategy and program processes has grown, But, despite increased consulta-tions, their concerns might not always be reflected effectively in CSP formulation. Moreover, CSO involvement in areas such as pol-icy advocacy and monitoring and evaluation is comparatively rare. In addition, the increase in ADB spending on capacity building of CSOs has centered on grass-roots CSOs such as water users associations and farmers’ groups. Nevertheless, where CSOs are involved in network development, their role is often narrow, focusing on facilitating information exchange and communication on short-term project implemen-tation issues. On the one hand, strategies for involving CSOs as partners in implementing ADB’s policies on governance and anticorruption are weak. On the other hand, the strategy for involving CSOs in implementing gender and development policies has been effective, particularly in its long-term approach and early focus on capacity building to put in place appropri-ate legislation and regulations. ADB has improved creation and capture of knowledge on CSO involvement in ADB operations. Much of this, however, is based on qualitative, rather than quantitative, data and information.

The number of loans with CSO involvement has been increasing over time, from 59% in 2000 to 81% in 2007. Looking at the ANR sector only, more than three-fourths of the loans approved have CSO involvement. How-ever, a more significant analysis that should be looked into is to see what type of participation were done by the CSOs. The annual reports in which the data were collated did not show any classification. Also, according to the NGO and Civil Society Center, there are no existing criteria or guidelines on how NGOs who will participate in consultations are selected.

Figure 5. Ladder of civil society participation

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2007 2006 2005 2004 2003 2002 2001 2000

No. of ADB loans approved 74 70 65 74 72 73 64 70

No. of ADB loans with CSO involvement

60 55 48 48 47 40 36 41

% from total loans 81% 79% 74% 65% 65% 55% 56% 59%

No. of ADB loans approved in the ANR sector

5 14 8 7 12 17 12 25

No. of ADB loans in the ANR sector with CSO involvement

4 13 8 -- 9 14 11 18

% from total loans in the ANR sector

80% 93% 100% -- 75% 82% 92% 72%

Table 16. Loans with CSO involvement

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Main Findings

The matrix below shows the main findings of this paper:

Table 17. Main findings

Country

Planning

• The main planning and programming document for each ADB member country is the CPS which is aligned both with the country’s development plan (MTPDP for the Philippines) and the corporate strategic priorities of ADB (Strategy 2020). This is understandable, since the clients of ADB are member-countries. The underlying assumption is that country plans embody and respond to the needs of the people. CPS formulation has been revised to lessen preparation time and required resources. However, CSO participation becomes discretionary in the process.

Assistance

to member

countries

• The top three sectors in terms of loans extended from 2004-2008 are Transport and Communications (31%), Energy (18%), and Multisector (15%). The ANR sector ranked 7th. In terms of grants, the top three sectors are Multisector (27%), Transport and Communications (22%), and Agriculture and Natural Resources (12%).

Assistance to

the Agriculture

Sector

(Regional level)

• Strategy 2020, the long-term strategic framework of the ADB, outlines fi ve core areas of operation. Agriculture falls on the “other areas of operation” category, together with health and disaster and emergency assistance.

• There has been decreasing support for the ANR sector based on the volume and value of loans extended. The number of loans for this sector declined from 82 loans in 1995–2000 to 65 loans in 2001–2006. However, an increase in the number of loans to the agriculture and natural resources sector was observed in 2006 in response to demands from the PRC and DMCs in South and Southeast Asia.

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ADB Projects in

the Philippines

• The CSP for the Philippines in 2005-2007 is geared towards improving the fi scal outlook and investment climate, and downplays important issues such as food security, education, and health.

• The COBP 2010–2012 is closely aligned with the Strategy 2020 of ADB. Of the fi ve core areas of operation in the strategy, four—infrastructure, environment, fi nancial sector development, and education—are covered by the proposed lending program. 7 projects and 3 technical assistance for the ANR sector are in the pipeline. In terms of value, total amount of assistance for the ANR sector is US$702.4 million or 25% of total assistance.

• Of the 346 approved projects in the Philippines from 1990 to 2009, 34 projects or 10% are agriculture-related. The projects are in the form of loans and technical assistance. Volume of agriculture-related projects is highest in the years 1993, 1996, and 2000.

• In terms of value, 9% of total assistance to the Philippines or more than US$ 701 million was devoted to the agriculture sector. The biggest share allocated to the agriculture sector was in 2000, at 45% of total loan amount.

ADB Projects in

Indonesia

• Measured in cumulative ADB lending, 44% of overall lending supported agriculture and natural resources, energy, and transport and communications.

• From 1998 to 2008, after the Asian fi nancial crisis, lending to the abovementioned sectors decreased to 18%, indicating a shift from project-oriented physical infrastructure support to policy-based lending.

• Based on the cumulative ADB lending as of December 2008, the agriculture and natural resources sector comprised 16% of the total loans.

• The agriculture and natural resources sector has one of the lowest project success rates, at only 40%.

• From 1990 to 2006, 35 agriculture-related projects were assisted by ADB in Indonesia. Total project cost amounts to US$ 1.1 billion.

Civil Society

Participation

• An ADB special evaluation study concluded that the ADB’s capacity to engage CSOs in country strategy and program processes has grown. But, despite increased consultations, their concerns might not always be refl ected eff ectively in CSP formulation.

• CSO involvement in areas such as policy advocacy and monitoring and evaluation is comparatively rare. In addition, the increase in ADB spending on capacity building of CSOs has centered on grassroots CSOs such as water users associations and farmers’ groups. Nevertheless, where CSOs are involved in network development, their role is often narrow, focusing on facilitating information exchange and communication on short-term project implementation issues.

• The number of loans with CSO involvement has been increasing over time, from 59% in 2000 to 81% in 2007. Looking at the ANR sector only, more than three-fourths of the loans approved have CSO involvement.

• However, a more signifi cant analysis that should be looked into is to see what type of participation were done by the CSOs. The annual reports in which the data were collated did not show any classifi cation. Also, according to the NGO and Civil Society Center, there are no existing criteria or guidelines on how NGOs who will participate in consultations are selected.

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In the Philippines, there are a number of NGOs conducting similar ac-tivities in monitoring the ADB. For instance, the NGO Forum on ADB has been initiating and co-organizing key events related to issues on the

operations of the ADB. Some of the Forum’s activities include networking and advocacy, capability building, research, and publication. The Forum was originally established as the NGO Working Group (NWG) on the ADB in 1991 by 20 NGOs from 16 countries. It was reorganized in 1997 and regis-tered at the Securities and Exchange Commission in 2001.

In 2001, the Asian NGO Coalition for Agrarian Reform and Rural Devel-opment (ANGOC) was commissioned by the ADB to prepare a study propos-ing mechanisms for fostering effective, productive, mutually satisfactory, and sustained dialogue and cooperation between ADB and NGOs. The study served as inputs in the formulation of the framework for cooperation.

Other NGOs conducting similar monitoring are the IBON Foundation, Freedom from Debt Coalition (FDC) , Focus on the Global South, ODA Watch, and Social Watch. In 2008, 51 local and international CSOs released a sign-on statement that rejects the ADB’s strategic framework for a “New Asia” as embodied in the ADB plans “Strategy 2020” and the “Long Term Strategic Framework”. The CSOs argue that the plan is a continuation of the

Monitoring Indicators

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46ADB’s policy of pushing privatization of services within Asia. Privatization of these services, CSOs argue, has led to "huge and continuous increases in rates, much diminished access of poor households and communities to these services, the monopoly of natural resources by private businesses, massive dislocations of communities, and environmental damage."

Several NGOs have also expressed dismay with ADB projects that negatively impact on food security and agricultural development. In 2008, the Asia Pacific Network on Food Sovereignty (APNFS) caught the media’s attention when they argued that the ADB’s loan conditions have pressured the Philippine government to “deregulate and privatize” agriculture. Fur-thermore, APNFS argued that the ADB continues to insist that the govern-ment "give up its quantitative restrictions on rice imports", a measure that protects the farm sector. Organizations like APNFS are calling on the ADB to "reform its conditions according to the needs of the country it would like to help." A similar report was published by the Agence France-Press stating that the ADB is struggling to cope with the growing food crisis and criticism over its role and relevance ahead of its annual meeting in Madrid. The ADB has been accused by civil society of ignoring warnings leading up the crisis and also contributing to it by pushing loan conditions that many say unfairly pressure governments to deregulate and privatize agriculture—leading to problems such as the rice supply shortage in Southeast Asia.

In May 2009, APNFS convened a forum dubbed Reclaiming Water Rights, Reclaiming Food Sovereignty in Indonesia where the ADB is hold-ing its Annual Governors’ Meeting. The APNFS showed how ADB’s loans in irrigation, flood control, and export crop promotion have led to the loss of income and livelihood of poor farmers and fishers, food insecurity, and destruction of land and water resources. They demand the shutting down of the ADB because its projects have contributed to the growing poverty and hunger in Asia, citing as an example the poor farmers in Agusan del Norte who faced growing indebtedness as a result of the ADB project Calagayon Communal Irrigation System.

What can be observed is that existing monitoring of the organizations are done within the various phases of ADB’s project cycle. A number of them engage in post-project monitoring, including assistance to communi-ties adversely affected by ADB projects.

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In November 19, 2009, the ADB invited selected NGOs and academe for an orientation on its accountability mechanism. 15 organizations attended the activity. The aim of the activity is to brief the participants on ADB’s Ac-countability Mechanism and to familiarize tem with the procedures for ac-cessing the Office of the Special Project Facilitator (OSPF) and the Compli-ance Review Panel (CRP). In a nutshell, the Accountability Mechanism has two distinct but related phases: 1) a problem-solving phase, undertaken by the OSPF to help solve problems of affected people caused by ADB projects, and 2) a compliance review phase undertaken by the independent CRP to investigate whether harm is caused by ADB's non-compliance with poli-cies and procedures. One of the issues raised during the open forum was the insufficiency of the scope of cases that can be filed under the OSPF. For one, complainants should prove that a “material harm” is committed or will be committed. The implication is that negative impacts that are not tangible or cannot be physically proven will not be taken into account (e.g., those affecting biodiversity, natural habitat, indigenous culture and traditions, others). Indeed, there is still a need to widen the scope of accountability for the ADB.

This paper showcased how the ADB fulfills its commitment to the Philippines in terms of addressing the issue of food security and agricultural development. It outlined how programs and projects are prioritized within the institution, using ADB’s strategy framework and the developing member country’s development plan. It is imperative for civil society organizations (CSOs) to be aware of ways that will enable them to monitor ADB’s assis-tance to the agriculture sector.

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48Table 18. Monitoring indicators

Indicators How to monitor Source*

Prioritization of sector (i.e., agriculture)

• Review ADB’s strategy and fi nd out if agriculture is one of the priority sectors

• Compare the share of agriculture-related projects to the total projects funded by the ADB in the Philippines, in terms of volume and value

• ADB’s long-term strategy framework (Strategy 2020)

• List of ADB projects in the Philippines

Alignment with country development plan

• Review the Country Partnership Strategy and fi nd out if the priority programs for the next three years complement with the Philippines’ medium-term plan

• Country Partnership Strategy• Country development plan

(MTPDP)

Public disclosure/Transparency

• Check availability of documents in the ADB website of agriculture-related projects

• Project documents:• Project Information Document

(PID)• Project Preparatory Technical

Assistance (PPTA) Reports• Report and Recommendation of

the President (RRP)• Loan Agreement• Progress Reports on Loan Tranche

Releases• Project Administration

Memorandum• Project Completion Report (PCR)• Project Performance Audit Report

(PPAR)• Impact Evaluation Study (IES)

Effi ciency of project implementation

• Review of project completion documents

• Interviews with designated ADB offi cers and executing agency (e.g., DA, DAR)

• Project Completion Report (PCR)• Project Performance Audit Report

(PPAR)• Impact Evaluation Study (IES)• COA Reports

Civil society participation

• Review of national planning process

• Presence of CSO representatives during consultations

• Engage dialogues with national agencies

• Key informant interviews of implementing agency and project staff s

• Local bodies with CSO participation mechanisms (LDCs, LSBs, PARCOM)

• Country anchors of the NGO and Civil Society Center of the ADB

* Most project documents are available at the ADB website

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Conclusions

Based on the review of the ADB process and its contribution to address-ing food security and agricultural development issues, the institution's assistance is highly recognized particularly on infrastructure develop-

ment. However, there are some concerns on the appropriateness and re-sponsiveness of these projects in clearly addressing the needs of the agricul-ture sector, as identification of priority programs and projects are confined to the CPS, which in turn is confined with the national development plan.

In the ADB's project cycle, there are no concrete mechanisms or steps where CSOs can provide feedback, though the ADB stresses that all the processes have participatory components. The efforts for CSO participation within the ADB is a rather new field, since the NGO and Civil Society Center was created only in 2001.

What is lacking is a clear structure where CSOs can participate within each phase of the project cycle. Involvement of CSOs should not be lim-ited to post-project review only but in the planning process as well, since a mechanism for validating the responsiveness and appropriateness of the national plans is inadequate.

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Annexes

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Annex A

Case Study (Philippines): Agrarian Reform Communities Project (ARCP)

During the Asian Development Bank programming Mission in November 1996, the Government of the Philippines requested the ADB to pro-vide technical assistance (TA) to the Department of Agrarian Reform

(DAR) for the formulation of a project that would support the implementa-tion of the Comprehensive Agrarian Reform Program (CARP). This support is needed to execute the department’s thrust of developing the Agrarian Reform Communities (ARCs) into a self-sustaining and self-reliant com-munity for alleviation of lives in the countryside. In response to the Govern-ment's request, the ADB approved the TA in March 1997 and subsequently a TA study was completed in August 1997. The project was appraised and approved by the ADB in 1998 and the loan agreement was signed in March 1999.

The project addressed rural poverty in the ARCs and key constraints in agricultural production through demand-driven integrated area develop-ment. The ARCP supported the DAR’s ARC development strategy, which was enhanced and re-aligned to support the overall rural development ob-jectives of the MTPDP. To expound, the project’s goal was to increases the opportunities for improving the socio-economic status in the selected ARCs by providing basic infrastructure and enhancing agricultural production and

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54productivity in a sustainable manner. Covering 165 ARCs in 35 provinces nationwide, the ARCP had four components:

1. Rural Infrastructure• Access infrastructure• Irrigation• Potable water supply (PWS)

2. Land Survey3. ARC Development Support

• Agricultural development support• Rural enterprise development support• Community and institutional development• Credit

4. Project Management and Capability Building

The project was to benefit about 26,000 farming households directly from agricultural development investments while some 200,000 people would benefit from the improved road network and better access to social and economic facilities provided by the project.

The executing agency was the DAR through the Foreign-Assisted Proj-ects Office (FAPsO) and it was assisted by various government agencies, as follow:

1. Department of Agriculture (DA) – National Irrigation Administration (NIA) and the Special Concerns Office (SCO)

2. Department of Environment and Natural Resources (DENR) – Land Man-agement Bureau (LMB) and the Planning Division

3. Department of Finance (DOF) – Municipal Development Fund Office (MDFO)

4. Land Bank of the Philippines (LBP)5. Regional Government of the Autonomous Region of Muslim Mindanao

(ROG-ARMM)6. Local Government Units (LGUs)

The table below shows the provinces and number of ARCs per province covered by the project. A majority of the ARCs are in Mindanao, at 46% (including ARMM). The most number of ARCs covered by the project are in the provinces of Iloilo and Bukidnon.

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Table 1. Provinces covered by ARCP

No. Provinces No. of ARCs Percent

Luzon 51 31%

1 Ilocos Sur 5 3%

2 La Union 5 3%

3 Pangasinan 5 3%

4 Cagayan 8 5%

5 Quirino 2 1%

6 Nueva Vizcaya 3 2%

7 North Nueva Ecija 5 3%

8 South Nueva Ecija 6 4%

9 Oriental Mindoro 3 2%

10 Palawan 4 2%

11 Catanduanes 2 1%

12 Sorsogon 2 1%

Visayas 39 24%

13 Aklan 5 3%

14 Antique 4 2%

15 Capiz 4 2%

16 Iloilo 10 6%

17 Guimaras 2 1%

18 Eastern Samar 7 4%

19 Western Samar 5 3%

20 Northern Samar 2 1%

Mindanao 56 34%

21 Bukidnon 10 6%

22 Camiguin 3 2%

23 Davao City 4 2%

24 Davao del Sur 7 4%

25 Sarangani 4 2%

26 South Cotabato 8 5%

27 Surigao del Sur 4 2%

28 North Cotabato 7 4%

29 Lanao del Norte 5 3%

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56No. Provinces No. of ARCs Percent

30 Sultan Kudarat 4 2%

ARMM 19 12%

31 Lanao del Sur 6 4%

32 Maguindanao 6 4%

34 Sulu 2 1%

35 Tawi-tawi 5 3%

Total 165 100%

PROJECT ACCOMPLISHMENTS

As of project completion in 2007, the overall physical performance was at 125%. Table 10 shows the weighted performance per component, comparing target and actual.

Table 2. Weighted performance of ARCP components

Component % Weight Actual Weighted Performance

Rural infrastructure 61.53% 62.49%

Land survey and titling 2.42% 2.30%

Development support 29.48% 50.78%

Project management 6.57% 9.34%

Total 100.00% 124.89%

For the rural infrastructure component, the global targets and accom-plishment per subcomponent is shown below. The total number of approved subprojects (SPs) is 486 while 17 SPs were cancelled. The cancellations were due to the unavailability of the LGUs to provide counterpart funding. Of the 11 remaining SPs, the completion of 7 SPs was delayed because of the late provision of the committed GOP fund requirement. The other 4, all in the ARMM, are for IRA intercept resolution.

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Table 3. Rural infrastructure targets vs. accomplishments

SubcomponentGlobal physical targets Total

approvedCancelled

Actually

fi nanced

Actual

accomplishmentOriginal Revised

Access (km) 1,500 1,200 1,251.3(365 SPs)

16.8(5 SPs)

1,232.3(360 SPs)

1,201.3(352 SPs)

Irrigation (ha) 6,500 6,500 8,453(53 SPs)

662.3(7 SPs)

7,790.7(46 SPs)

6,791.8(43 SPs)

PWS (unit) 900 160 103.0(68 SPs)

5.0(5 SPs)

98.0(63 SPs)

98.0(63 SPs)

Total SPs 486 17 469 458

It is also observed that the original targets for access infrastructure and PWS were reduced. The revisions were due to the change in the demand of the LGUs. Under the demand-driven approach of the project, LGUs par-ticularly in Luzon areas actually preferred concrete roads, contrary to the original design of providing “all weather” roads and mostly rehabilitation of already existing roads. For the PWS, the beneficiaries strongly preferred Level II PWS over the Level I used in the appraisal. There are identified bottlenecks in implementing the rural infrastructure component, some of which include: 1) delayed fund releases, 2) existing ARC Development Plans (ARCDP) not yet integrated in the LGU’s Annual Investment Program (AIP), 3) operation and maintenance not given importance in the infrastruc-ture programming of the LGUs, 4) LGU absorptive capacity, 5) unexpected movement in foreign exchange differentials.

For land survey, the priority areas identified and targeted during project appraisal had already been surveyed by the DENR and the DAR using their regular funds. Hence, to substantiate the target of 100,000 hectares of public alienable and disposable lands, the DAR and DENR identified other areas for coverage that are at least within the same municipality or province of the ARCP-assisted provinces. As of project completion, 97% had been approved and released and 86% had been distributed to farmer beneficiaries.

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58Table 4. Land survey targets vs. accomplishments

Major activitiesTarget

(has.)

DAR

(has.)

DENR

(has.)

Total

accomplishment

(has.)

Percent

accomplished

Approved by LSSC 100,000 56,203 46,874 103,077 103%

With issued fund allocation 100,000 26,503 46,874 103,077 103%

Bid and awarded to surveyors

100,000 55,673 42,261 97,934 98%

Completed fi eld survey and submitted to LMS-DENR for approval

100,000 56,009 44,192 100,201 100%

Approved and released by LMS-DENR

100,000 53,643 43,614 97,257 97%

Distributed area 100,000 43,135 43,090 86,255 86%

This component also encountered various problems, including difficul-ties in the final packaging of survey modules or contracts, limited funds in hiring additional personnel in the LMS-DENR Regional Offices, and com-plex issues in the generation, documentation, and processing of individual titles.

Among the ARCP components, ARC development support attained the highest accomplishment at 172%. Some of the accomplishments for each subcomponent are shown in the table below.

Table 5. ARC development support accomplishments

Subcomponent Accomplishments

Agricultural development Established 512 demo farms in 165 ARCs18,183 farmers adopted new and improved technologies for high-value and commercial crops, livestock, and aquaculture4,022 farmer leaders trained in crop and animal breedingTechnical support was provided by the 712 LGU extension workers trained and 485 extension services activated

Rural enterprise development

144 ARCs provided with management and credit assistance2,707 ARC leaders trained to manage rural enterprises304 cooperatives and ARC organizations assisted with joint venture schemes and marketing tie-ups

Community and institutional development

34,000 ARBS mainstreamed in the 950 ARC organizations that were strengthenedARC Development Plans prepared for all covered ARCs

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However, the credit subcomponent showed the lowest utilization, at only 5%, mainly because it failed to use most of the intended LBP financing worth PhP1.18 billion. As of project completion, only 8% of the LBP facility was utilized. The low utilization was due to: 1) strict cooperative accredita-tion criteria set by the LBP, 2) several farmers who had previous loan or bad record were not qualified to avail new agricultural production loan, 3) cooperatives with past due loans were also not able to avail of new loans, 4) low productivity, on the other hand, was addressed through different agri-cultural technologies but farmers themselves opted not to avail of bank loan, and 5) for cooperatives which had been accredited by LBP and provided with credit line, the cooperatives opted not to avail of the loan due to high bank interest rates.

For the capacity building and project management component, 142% of its targets were attained, mainly because the project was able to comply with the pertinent conditions and covenants set by the ADB. These in-cluded: 1) establishment and full operation of the CPMO and APOs in 2001, 2) establishment and full operation of the M&E FAPsO in 2002 plus the development of an ARC-level M&E system, and 3) updating, revision, and approval by the PMB of the project’s Operations Manual.

IMPACT

Impact Assessment (IA) studies were conducted to gauge the relevance and effectiveness of the project in achieving desired outcomes. The results indicate that the project contributed to increasing incomes and reduc-ing poverty in the covered ARCs. As contained in the appraisal document, the goal specifically was to increase the average annual farm family in-come from PhP36,000 to PhP60,000. The baseline survey results in 2001, however revealed that ARC households already had income averaging PhP55,590, which was close to but still below the national poverty thresh-old of PhP56,275 during that period. The IA study in 2006 showed that the income of ARB households benefiting from ARCP (equivalent to PhP93,702) increased by as much as 69% from the baseline figure and was above the national poverty threshold of PhP70,615.

From 2001-2006, on-farm, off-farm, and non-farm incomes also in-creased by 95%, 151%, and 21%, respectively. The huge improvement in off-farm incomes of ARBs and non-ARBs is due to the availability of jobs

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60in other farms, which could be activities ranging from land preparation to harvesting and agricultural commodities processing.

PROJECT COSTS AND DISBURSEMENTS

The actual financing of the project amounted to US$135.68 million (at ex-change rate of US$1=PhP42). This represents 80% of the appraisal estimate, as shown in the table below. The loan appraisal estimate was adjusted as a result of two partial cancellations of loan proceeds and component budget reallocations.

Table 6. ARC Project cost, by source

SourceProposed

(US$ ‘000)

Adjusted

(US$ ‘000)

Actual

(US$ ‘000)

% from

Appraisal

ADB 93,162 72,645 88,590 95%

GOP 45,332 45,332 44,642 98%

DAR/Natl. govt. 26,930 26,930 30,274 112%

LGUs 18,402 18,402 14,368 78%

LBP 30,359 30,359 2,447 8%

Total 168,853 148,336 135,679 80%

The loan cancellations were made because of foreign exchange differ-entials. This led to a deficit of some US$4 million (about PhP200 million) in the loan proceeds for the rural infrastructure component. The GOP, through the DAR, committed to shoulder the deficit in the amount eventually pegged at PhP194 million. To do that, the DAR realigned PhP150 million from the funds of a slow performing foreign-assisted project, and covered the balance of PhP44 million from other GOP sources.

Almost throughout its implementation, the ARCP was beset with delays in the supply of GOP and loan proceeds funds. The slow releases in 1999-2001 hampered the implementation of earlier approved infra subprojects. The problems were compounded by the delays in the replenishment of the project’s imprest funds in 2000-2002 and the non-release of funds under the Municipal Development Fund Office (MDFO) ceiling in the 2000 General Appropriations Act (GAA). In addition, the re-enactment of the GAA in 2002-2004 negatively affected fund releases to the ARCP.

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PERFORMANCE OF DAR AND ADB

The DAR as the Executing Agency, according to the PCR, satisfactorily worked to ensure compliance with loan covenants, delivery of commit-ments, and attainment of project goals. As part of the ODA portfolio of the DAR under the FAPsO, the ARCP was integrated in the DAR’s operating systems, from the national to the municipal levels. Funding constraints ex-perienced in 2003-2005 necessitated various adjustments in the ARCP work program. A number of challenges were encountered as the DAR underwent leadership and organizational changes and bureaucratic reforms.

In monitoring the ARCP progress, the ADB fielded a total of 11 missions involving 428 person-days of consultant and staff services deployed during actual implementation. All the missions served their purpose of surfacing implementation issues and concerns and forging agreements on how to ad-dress them. The various recommendations of the missions were generally accepted by DAR. There were no major disagreements between the ADB and DAR in relation to the provisions in the loan agreement, procurement, implementation schedules, and other matters pertaining to project imple-mentation.

COA REPORT ON ARCP

The Commission on Audit (COA) conducts annual audit of ODA projects. The years in which ARCP has been included in the audit is from 2005-2007. The summary of findings for the ARCP is found in the table below. It can be seen that the observations on physical performance are due to the fund release delays.

Table 7. Summary of COA findings on ARCP, 2005-2007

Observations Year observed

Financial Performance

Absence of inventory-taking and records/reports, non-maintenance of PPE ledger cards, unrecorded issuances of PPE, and non-reconciliation of/unreconciled/unaccounted balances of PPE and their respective physical inventory reports

2006, 2007

Non-classifi cation/misclassifi cation of various accounts 2006

Non-compliance with prescribed laws, accounting and auditing rules and regulations/loan agreements/contracts

2006

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62Observations Year observed

Absence of/unupdated subsidiary ledgers/prescribed cash book/accounting records and unreconciled general ledger and subsidiary ledger balances

2005, 2007

Unliquidated cash advances/fund transfers/due from LGUs/due from other funds

2006, 2007

Control breakdowns in the grant, utilization, and liquidation of cash advances

2006

Outstanding accounts payable for more than 2 years/without records and valid claims

2006

Non-preparation/late submission of bank reconciliation statements/disbursement vouchers/reports

2006, 2007

Unreleased checks not restored to the cash balance as of year-end resulting in understatement of cash balance

2007

Physical Performance

Project’s objective of increasing the income of intended benefi ciaries not sustained

2005

Delayed completion of projects/low rate of accomplishments due to, among others, delay in the clearing of ROW and failure of agency to implement the project within the period stipulated contributed to the incurrence of commitment fees

2006

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Annex BCase Study (Indonesia): Poor Farmer Income Improvement through Innovation Project (PFIIP)

Table 1. Shortlist of projects to be monitored

Project

No.Project Title Date approved

Type of

Assistance

Total Fund

(US $)

23312 Smallholder Tree Crop Processing Project (STCPP)

12 November 1992 Loan 75,000,000

27357 Integrated Pest Management for Smallholders Crops Project (IPMSECP)

26 September 1996 Loan 44,000,000

29315 Participatory Development of Agricultural Technology

1 July 1997 Loan 63,800,000

34112 Poor Farmer Income Improvement through Innovation Project

15 August 2002 Loan 56,000,000

CRITERIA FOR SHORTLISTING:

1. The projects scheme and type assistance is loan2. Relatively big project, indicate from total amount of project fund 3. The project is under department of agriculture as executing agency4. The project have been finished or almost finished, minimal more than 50

% of fund disbursement 5. At least one location of the project is in Central Java for effectively field

monitoring due to the limited available budget.

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64From short list of the project, we recommend to monitor the project

on “ Poor Farmer Income Improvement through Innovation Project”. This project is relatively big project, and as one of the programs of Department of Agriculture.

Table 2. Project profile

Loan name Poor Farmer Income Improvement Through Innovation Project

Fund source Asian Development Fund (ADF) with total fund US $ 56 Million

Fund disbursement 76 % (US $ 42, 459)

Description of outcome purpose

1. Improved targeting of village-level public investments to location-specifi c needs of agricultural and rural development.

2. Increased access of poor farmers to information. 3. Reorientation of agricultural research to marginal rainfed

areas.

Project location The Project will be implemented in about 1,067 villages in the fi ve districts of Temanggung and Blora in Central Java, East Lombok in West Nusa Tenggara, Ende and East Nusa Tenggara, and Donggala in Central Sulawesi.

Project components 1. Poor Farmer Empowerment Weight to Total Project: 71% Total Component Cost: $49.5 million ADB Financing: $38.6 million

2. Development of National and Local Agricultural Information Resources Weight to Total Project: 2% Total Component Cost: $1.6 million ADB Financing: $1.2 million

4. Support for Agricultural Innovation Development and Dissemination Weight to Total Project: 17% Total Component Cost: $10.1 million ADB Financing: $1.2 million - Assist Borrower in reorienting its upstream technology development activities toward the needs of poor farmers through supporting staffi ng, operational costs, equipment, and consultant services - Establishing a fund to be administered by the BPTPs in the targeted provinces

5. Project Management Weight to Total Project: 10% Total Component Cost: $7 million ADB Financing: $5.1 million

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METHODOLOGY

1. Document study: internet, ADB website, Agriculture Department Website 2. Observation and Investigation in the field: Temanggung / Blora as project

area for monitoring.3. 4 villages accept PFIII project.4. Deep interview with the farmers and farmer organization. 5. Interview with the local NGO who assisted the farmer organization6. Interview with Personal in charge of PFIII Project – in local area. 7. Direct observation in project area.

Figure 1. Project Structure Organization

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66PROJECT RESULT IN TEMANGGUNG

Field Observation was done from August 7-10, 2009 in 4 villages:

1. Campuranom (Kec. Bansari) village2. Sriwungu (Kec. Tlogomulyo) village3. Suropadan (Kec. Pringsurat) village4. Getas (Kec. Kaloran) villageThe obstacle: The local NGOs and PIUs did

not want to give/share information on the Poor Farmer project if there is no letter from the Agriculture Department in Jakarta. They feel as imple-menters in the field only.

The success factor: The poor farmer income improvement through in-novation project have performed in almost all villages and local government contribution of 16.5 million per village. The process of villages selection based on information by Local NGO and official of Agriculture in district level.

MONITORING RESULT:

The most of project is concerned in infrastruc-ture, example: Irriga-tion

In Campuranom village: (Kec. Bansari) They got fund around Rp 240 million and have succeeded in building an irrigation system 80 meters long and the irrigation is being man-aged by farmer organi-zation.

Comparison of labor cost between farmer organization and contractor:

• Farmer Rp.17.500/ day (under 2 dollars)• Contactor Rp 25.000-30.000/day (up to 2 dollars/day)

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The impact of differences in labor costs: The programs man-aged by the farmers can build a longer irrigation compared to that done by the contractor.

The irrigation has helped the tobacco farmer to get water, the rice field can be reused for “mina padi” cultivation. In terms of planning, the participa-tion was for formality only. De-cisions are made by many local leaders, who usually get govern-ment projects. The young people’s group cannot handle the pressure from the local leaders. The women are not involved in the planning (in terms of gender representation). In fact, there was only one female village facilitator.

With regards to implementation, the impact of irrigation is significant in terms of water access and availability of water. However, the project did not give support for farmer organization activities. The training is also inappropriate with farmers’ needs. The assistance for farmer group is not running well, because the Cos have less capacity or the Cos were changed/moved from the location. In addition, the secretariat of village information is not working and has become a warehouse for fertilizer. The monitoring is for selected village or particular farmer group.

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