The Asian Development Bank is committed to expanding and diversifying its partner base without compromising its competitive process to recruit qualified consultants and procure goods, works and related services.
The only multilateral development bank dedicated to poverty alleviation in Asia, ADB’s operations totaled about $21 billion in 2013, but bank officials say there is another $21 billion of uncommitted portfolio that represents a broad range of business opportunities across the continent and in a variety of sectors and thematic areas. ADB partners with governments, the private sector, nongovernmental organizations, development agencies, community-based organizations, foundations and professional organizations.
“Almost all ADB projects rely on consultants and contractors,” ADB Procurement Director Ignatius Santoso revealed during the fifth ADB Business Opportunities Fair held this week at the ADB headquarters in Manila, Philippines, and attended by more than 300 prospective and current consultants.
Santoso and other ADB officials stressed that most of these opportunities exist in infrastructure, environment, regional cooperation and integration, finance sector development and education, while other limited opportunities can be found in the health, agriculture, and disaster and emergency assistance sectors.
Each year there is a $750 billion shortfall in infrastructure financing in Asia and ADB is one of the few institutions well-positioned to help meet the challenge. Of ADB’s $21 billion operating total in 2013, approximately $13 billion was invested in the form of loans to developing member countries. The vast majority of those funds are invested in the actual construction of major infrastructure.
With so much ADB funding targeting infrastructure development, officials were candid that the pool of money available for softer consulting and advisory services is far smaller and mostly financed by grants as opposed to loans to borrower countries.
“Borrowers are generally reluctant to spend on something intangible,” ADB Senior Procurement Specialist Galia Ismakova admitted, referring to opportunities for individual consultants and consulting firms. In 2013, ADB issued $849 million in grants and $149 million in technical assistance.
Penetrating a multilateral agency like ADB is often the most difficult challenge for prospective business partners. Santoso stressed that while working with ADB can “unlock the door for business in emerging economies,” of the 3,000 individual contract awards issued in 2013, only 30 percent were “first timers” or entities with no prior experience working with the bank. ADB’s message was clear: The bank would do its part to smooth business processes and effectively engage partners, but consultants and contractors should expect a competitive environment.
“Christopher Columbus discovered America without a strategy, but that won’t work for you,” said Santoso, who presented a particularly forthright picture of the business opportunity landscape at ADB.
One effective penetration strategy, he said, is for bidding implementers to consider “less crowded” locations, including the Solomon Islands, Papua New Guinea, East Timor, Afghanistan, Pakistan, Cambodia and the Pacific states. Conversely, countries such as Laos, Thailand and Vietnam were identified as “more crowded” fields where 20 or even 30 bidders could express interest in a specific project and may not be the best market entry environments for less experienced partners.
Bank procurement officials also observed an increasing number of awards going to individuals over firms and a new focus on interdisciplinary skills and assignments as opposed to niche roles. In addition, ADB encourages the development and use of national consultants from developing member countries, contributing to a noticeable trend of international consulting companies establishing locally incorporated offices within those countries.
Developing member countries typically manage their own procurement, with ADB only providing oversight and guidance as necessary. Even various technical assistance projects can be delegated to borrower countries. According to Senior Procurement Specialist Jeff Taylor, while large-scale procurement is rarely handled by ADB, the bank’s procurement policies and guidelines, which these countries are expected to follow, are world class and aligned with those of other prominent multilateral development banks as well as best practices from the commercial sector.
The bank’s partner engagement strategy is being influenced by the reality that some borrower countries are approaching or have reached middle-income status. A midterm review of ADB’s Strategy 2020 — the institution’s main corporatewide strategy and planning document — determined that the strategy remained valid, but required a “rebalancing and sharpening,” according to ADB officials. Mandated by ADB President Takehiko Nakao, who was elected by ADB's board of governors and assumed office in April 2013, the midterm evaluation recalibrated operations to more seamlessly achieve three core bank priorities: inclusivity, environmental protection, and regional integration and cooperation.
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