Australia debates how ADB can adapt to changing region

The Asian Development Bank needs to change in order to remain a relevant and impactful player in regional development, analysts and ADB officials said during a public forum in Canberra, Australia on Wednesday.

The 50-year-old institution has been an influential player in poverty reduction for the Asia-Pacific region. But in order to respond to a host of emerging challenges — from an aging population, to climate change, to growing inequality between the rich and poor — the ADB may need structural and cultural reform, experts from Australia’s research community said in a discussions with ADB Vice President Stephen Groff.

Speakers urged the bank to become more nimble and adaptive in response to both crises and global development priorities. Moreover, the bank should consider emulating the social diversity of the region, they said, including by promoting women and more different country nationals within its leadership.

“We need to be much faster in our response, much quicker and more flexible,” Groff told the audience. When challenges such as climate change or market instability have “major negative impacts” on the most vulnerable economies, only fast action will prevent financial disaster, he said.

Being nimble also means aligning the bank’s priorities with the global agenda, Groff said. “With the Paris agreements, when you look at the SDGs, when you look at agreements coming out of Addis Ababa on finance for development, we need to be positioning ourselves in a way that we can respond to these global agendas and find our niche within those global agendas.”

Reflecting diversity

Asia has changed immensely over the past 50 years, Hal Hill, from the Crawford School of Public Policy, said at the forum. But the structure of the ADB has not.

“The ADB is a product of its history and it needs to change with the times,” he said. “When it was set up, it was obvious that Japan was going to be the only high income country in Asia. Now that has changed a lot, but has the ADB loosened up and changed with the times? Arguably not.”

Hill suggested that by always having a Japanese president, countries including China, India and Singapore felt shut out of the ADB’s decision-making process. “It explains partly why newer institutions including the AIIB have come to be,” he said. “In an ideal world you would have a merit-based system all the way to the top.”

As with the regional representation, Annmaree O’Keefe from the Lowy Institute for International Policy, said the ADB needed to take leadership on issues of gender reform, challenging Groff directly to take action.

“I have been stirred up after coming back from Iran where I saw that better use of the female half of the population would improve development,” she said. “This same methodology applies right across Asia.”

O’Keefe said the ADB needed to look at the gender makeup of its internal structure and change this for the organization to remain relevant in the future.

“You are almost all men and you have almost always been men,” she told Groff, adding that ADB member nations should push to to change the gender balance of the bank and its decision-makers.

An essential partner to Australian aid

The ADB could be an increasingly important development partner for Australia, O’Keefe said. One of the bank’s goals is to deliver effective governance to the Pacific, also a key investment priority for the Department of Foreign Affairs and Trade’s aid program

By working through the ADB, seen as a neutral body by Pacific nations, Australia could be more successful in impacting and influencing policy reform, she said. “Australia is very big in the Pacific but what we are seeing is a tendency for Pacific countries to refer to other countries for support,” she said. “Australia has a tendency to lecture.”

She continued, “The ADB can be a much better partner than even the World Bank in this region. It is of the region, for the region and by the region.”

Groff explained the ADB’s increased engagement in the Pacific was directly linked to Australia’s aid program. “Our focus is really due to the priorities the Australian government has placed on the Pacific, and this has forced the ADB to step up our engagement in the region,” Groff explained.

According to Groff, the ADB previously prioritized larger and less volatile countries. But Australia’s increased contributions to the ADB, and its own priority for the Pacific, resulted in change at the Bank and will continue to influence its programs over the coming years.

On Wednesday, the ADB announced a renewed commitment to partnership with DFAT and the World Bank that will see them increase engagement in the Pacific, focusing on DFAT development priorities including gender inequality, economic and environmental vulnerability and resilience.

“It is an important relationship that we have with Australia and one that is mutually beneficial,” he said.

Read more international development news online, and subscribe to The Development Newswire to receive the latest from the world’s leading donors and decision-makers — emailed to you FREE every business day.