Making good on promises it gave to get $7 billion in new funding, the Asian Development Bank is embarking on sweeping reforms aimed at turning bureaucrats into bankers better attuned to the needs of the private sector.
By reinventing the way it does business, the Manila-based lender hopes among other things to raise more private-sector cash for roads, power stations and other badly needed infrastructure and to nurture fledgling local bond markets.
The end result would be a more efficient bank making a difference at the margin to economic growth in a region that is home to two-thirds of the world's poor.
Yet the bank's top staff are under no illusions about the difficulty of overhauling a 2,200-strong institution that suffers from low morale and takes 20 months on average to design a loan project.
"It requires cutting back on the often self-spun web of bureaucratic obstacles that can rob us of our efficiency, our enthusiasm, and our inherent strengths," Joseph Eichenberger, one of the ADB's four vice-presidents, said this week.
Eichenberger was speaking at an unprecedented staff assembly convened to ram home that the ADB, in the words of its president, Tadao Chino, was facing a "moment of urgent challenge".
In the spirit of transparency and accountability that are part of the reform agenda, the ADB posted the speeches by its top brass to the assembly on its Web site, www.adb.org.
The ADB is no stranger to complaints about the effectiveness of its $6-billion-a-year lending programme.
But officials say ADB managers were taken aback by the fierce criticism levelled by some donor governments, including the United States, when negotiations to replenish the bank's soft-loan arm, the Asian Development Fund, started in Copenhagen last October.
Frustrated by what they saw as an over-centralised bank that lacked focus and was out of touch with its borrowers' needs, the donors gave Chino an ultimatum: no reform, no money.
The message got through.
Chino signed up for a private-sector-style, results-based management system, linking pay rises to performance, and other changes. In return, the ADB last month got $7 billion for its development fund, which lends on easy terms to very poor states.
At last month's ADB annual meeting on the South Korean resort island of Cheju, a number of rich-country governments made it clear they were impatient for the ADB management's promise of institutional renewal to produce concrete results.
"Genuine progress in this area will require fundamental changes in what is targeted, what is measured, and in management and leadership at every level," said Margaret Cund, head of the British delegation to the meeting.
Hence the urgency of this week's assembly and widespread speculation that Chino, in his fifth year at the bank, will step down before the end of the year. Japan traditionally names the president, and the name of Haruhiko Kuroda, a former vice-finance minister, is mentioned as a possible successor.
Some staffers say things are already changing for the better.
The bank's private sector department almost tripled its approvals of loans, equity investments and guarantees in 2003 to $563 million and is expanding local currency financing to mitigate the maturity and currency mismatches that deter lending and investment in Asia.
The ADB has raised a five billion rupee ($110 million) Indian domestic bond and plans similar issues in Thailand and China.
The bank is also due to sign soon a $200-million-equivalent peso swap with the Philippine government, to be used by banks for lending mainly to smaller firms for periods of up to 15 years.
Robert Bestani, a former Citibank executive who heads the private sector department, says such swaps will strengthen Asia's banking systems, spur investment and thus boost growth and jobs.
"We're very hopeful we can take this virtually to every country we operate in," Bestani said. "For the first time it will bring fixed-rate, long-term local currency financing to some of the emerging countries."
By providing more political risk and partial credit guarantees, the ADB also sees scope to get the private sector to finance more of Asia's huge infrastructure needs. A new team of experts has the job of showing the ADB's army of project designers how to harness these and other financing techniques.
"The average ADB staff member would be very unfamiliar with guarantees," admitted Geert van der Linden, another ADB vice president. "The purpose is to slowly get people in our operations departments to think of themselves not just as project designers but also as bankers," he told Reuters in a recent interview.
The shake-up also aimed to shorten the 20-month loan gestation period, van der Linden said. "We need to move faster because the private sector is not going to sit around and wait for the ADB to go through its bureaucratic hoops," he said.
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