As ADB Shifts Gears, a New Lending Focus on Urban Transport

The Asian Development Bank will decrease its support for road projects such as this one in Fiji as part of its new Sustainable Transport Initiative. Photo by: Rollie del Rosario/ADB

As part of what appears to be its first comprehensive transportation strategy, the Asian Development Bank will dramatically increase its focus on urban transportation, and reduce funding for road construction.

The regional lender unveiled May 25 its new Sustainable Transport Initiative, which aligns the bank’s transport operations with three strategic priorities under the bank’s Strategy 2020: inclusive economic growth, environmentally sustainable growth, and regional integration.

The ADB has “never had a plan” that maps out which strategic areas in transport the bank needs to support, said Tyrrell Duncan, director of the East Asia Department’s transport division, at the ADB 2010 Transport Forum.

STI will help ADB adjust its transport investments – which will reach USD3.4 billion each year from 2010 to 2012 – to tackle changing transport needs of developing member countries by building upon the bank’s existing transport operations, and supporting new and emerging fields of sustainable transport.

ADB defines a sustainable transport system as one that is accessible, safe, environmentally-friendly and affordable, Duncan said.

Sustainable Transport Partnership Facility

Aside from bringing about changes in the bank’s transport lending mix, the new initiative also lays the groundwork for the creation of a Sustainable Transport Partnership Facility to help mobilize financing and expertise to support the STI, as well as back the preparation and implementation of sustainable transport projects within individual ADB operations.

The facility is expected to be approved by ADB’s board of directors in “a short period of time,” Duncan said. While he did not specify the amount of the facility, Duncan noted that STPF will consist of a large amount of resources and “not just millions of dollars.”

STPF will provide grants to back policy advisory, and preeasibility and feasibility studies for sustainable transport projects through its innovation window. Grants will also be made available to fund “add-on” components to existing projects that enhance sustainability, such as traffic management and road safety.

The facility will also have a partnership window that will provide a platform for donors, research organizations and non-governmental organizations to contribute funding or expertise. The bank has recently forged an agreement with the Korea Transport Institute, Duncan said, to increase the two institutions’ cooperation in promoting energy efficiency and green growth within the transport sector through knowledge sharing, networking, exchange of staff and capacity building.

ADB’s New Transport Portfolio

Under the initiative, the bank will scale up its lending for urban transport and railway as well as inland waterways schemes. It will, however, decrease its support for road projects, according to WooChong Um. Transport projects comprise some 30 percent of ADB’s total lending, the deputy director general of ADB’s Regional and Sustainable Development Department said.

ADB will increase its funding for urban transport to about 30 percent of total ADB transport lending by 2020, from 2 percent during the 1970-2009 period. Public mass transit systems, non-motorized transport, traffic management and limiting use of private vehicles in busy urban areas constitute the bank’s urban transport schemes, according to STI documents.

Through the initiative, the bank will also scale up its assistance for railways and inland waterways to help combat climate change by promoting lower-emission transport solutions for long-distance freight and passenger traffic.

Improving cross-border transport and logistics through regional railway networks will also be a focus under STI. The bank will help more on the “soft side” by supporting dialogues and partnerships to facilitate transport across borders, Duncan said during the transport forum, which ends May 27.

Finally, the bank will also beef up its support of road safety and social sustainability. ADB’s road safety operations will back engineering and behavioral approaches to the safe construction, operation and maintenance of road infrastructure, and development of road safety management capacity. To support social sustainability, the lender will work on the “pro-poor dimensions” of transport by bolstering rural bus services and non-motorized transport, and other social dimensions of transport such as gender mainstreaming, HIV/AIDS and human trafficking.

The Manila-based lender intends to nearly halve its lending for road projects, from 74 percent of ADB’s total transport lending from 1970-2009 to roughly 40 percent by 2020, according to the operational plan of the STI released during the forum. The bank’s assistance for road projects covers infrastructure development, as well as the institutional, service and social dimensions of road rehabilitation, such as tolling, road funds and trade.

ADB has “no intention through this initiative to lose our interest and support for [road projects],” Duncan said, stressing that the bank will be “more selective” in backing road initiatives.

Duncan was quick to point out that change in ADB’s transport lending will be gradual, carried out in a span of 10 years. Furthermore, the ADB transport lending mix explained above may not be exactly adopted for each aid-recipient nation to enable the lender to tailor measures that are responsive to the needs of a partner country, he said.

The pattern of ADB’s transport lending “in each developing member country may not be like this,” Duncan said.

About the author

  • Ma. Rizza Leonzon

    Ma. Rizza Leonzon

    As a former staff writer, Rizza focused mainly on business coverage, including key donors such as the Asian Development Bank and AusAID.