ADB, China cooperate on funding standards

The mindset behind this (elderly care) project is to provide a community-based approach, combining home, communityand residential center services....

Editor’s note:

China has been teaming up with the Asian Development Bank (ADB) in various aspects, from fighting poverty to improving elderly care services and promoting green public transport.

Meanwhile, China has gradually introduced performance evaluations of budgets and projects that the ADB attaches great importance to. Now performance evaluation is a key indicator of how public funds are spent and in holding officials to account.

Marvin Taylor-Dormond, Director General of the Independent Evaluation Department (IED) of the ADB, recently discussed his thoughts on performance evaluation and cooperation between the ADB and China with Shanghai Daily staff writer Cao Xinyu at a forum in Chengdu, Sichuan Province. The forum, “2018 Asian Evaluation Week,” is in its third year and was organized by China’s Ministry of Finance and the ADB and co-hosted by the IED and the Shanghai National Accounting Institute.

Q: China has gradually adopted performance-based standards, both at the national and provincial level. What kind of challenges does China face implementing these standards?

A: To me, it is impressive what China is doing, not only because of the scale of this process, but also the pace.

In terms of challenges, first this large scale and rapid implementation will demand that the authorities define very specific and basic standards to be shared across all levels. Developing these common standards is important to ensure quality and comparability.

The second challenge is capacity development. With the systematic assessment introduced last year at the 19th National Congress of the Communist Party of China, everything must be evaluated. The demand is huge, and now the capacity to do this work, especially at the local level, needs to be built.

This leads to the third challenge: maintaining the credibility of the evaluation process, which means ensuring reliability of the data, objectivity in analysis and use of the reports. One more challenge is to ensure a strong third-party verification. Since we all tend to overclaim our achievements, it is vital that there is a third-party verification of self-assessment.

Q: Why is China strengthening the performance management of poverty reduction funds?

A: It is critically important. We heard during the 2018 Asian Evaluation week about the determination of the Chinese government to eradicate poverty by 2020. It is important to ensure that the funds go to the right people and that any sort of a spillover is minimized. In other words, funds need to be well-targeted. And for this reason, good metrics and evaluation are certainly important.

We also want the solutions to be sustainable. They must go to the poorest people and help increase their capacities and opportunities in the long term. It is to enhance their knowledge, skills, education and health conditions so that they can be absorbed by the market and get long-term and good quality jobs.

All of these require strict and careful monitoring, metrics and assessment.

Q: China is aging rapidly. To help China’s demographic transition, the ADB has been supporting elderly care services provided by local authorities. What are the criteria you look at when evaluating these services?

A: Aging is a critical issue. It is expected that by 2050 more that 30 percent of Chinese will be over 60. The ADB recently approved a project to support elderly care services in Hebei Province. The mindset behind this project is to provide a community-based approach, combining home, community and residential center services to ensure it is responsive to the real demands and traditions of the people. We evaluate this type of intervention with the same criteria we evaluate others. We check whether it is relevant to the needs and to the context, say, and the priorities of the government and the ADB.

Then we assess effectiveness. We look at whether the project achieves its intended objectives. The next dimension is efficiency. Was it done at the lowest cost possible? Was it done without delays? Was it done using the adequate framework of delivering the service for the target population?

Then we look at sustainability. It is fundamental that the benefits of the solution are sustained after the Asian Development Bank withdraws.

Q: According to the ADB, China has the most public-private partnership (PPP) projects with finance in place. How is ADB cooperation with China in carrying out PPP projects?

A: The ADB supports countries by helping them develop a framework for PPP projects, by informing and advising countries to set up the transactions and, finally, by investing directly through sovereign operations, or private sector or state-owned enterprises.

Q: How do you choose PPP projects?

A: It must be relevant to solving the issue that has been identified. The ADB is also interested in ensuring the financial soundness of the project and that the procurement standards of the Bank are met. The ADB focuses on making sure environmental and social protections are in place, so that the project does not cause severe damage to the environment or society, like displacing people without appropriate compensation. The ADB looks into the distribution of risks, because PPP is basically about transferring risks from the public sector to social capital or the private sector.

The ADB also looks at its added value, especially when investing through the private sector. We call it the additionality, meaning that the ADB brings resources, expertise and standards that might not be provided by the national system.

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