NGO Forum to ADB: “ADB’s 51st AGM promotes Private Profit at Public Risk”

Manila, Philippines (May 1) - Amid a looming infrastructure investment collaboration between the Asian Development Bank (ADB) and its touted rival the Asian Infrastructure Investment Bank (AIIB), an international civil society network challenged the ADB in its 51st Annual Governors Meeting to address the clear calls for transparency and accountability of its projects and operations.

The 250-member strong NGO Forum on ADB is urging the Bank to implement concrete policy tools and practices on safeguards and ensure the rights of environmental defenders as more and more borrowing governments are suffering from shrinking civil society space. In order to eradicate poverty and inequality in Asia, the ADB on one hand recognizes the Sustainable Development Goals (SDGs) and the Paris Agreement but commits to move its funds through the private sector, disenfranchising the poor and the marginalized. The Forum calls out ADB in its de-risking private sector to invest in corporate driven infrastructure needs at the environmental and social cost of local people across Asia.

This 51st AGM, the NGO Forum on ADB explicitly states that infrastructure which does not address local peoples needs is nothing but a marketing ploy for attracting new financial players into an asset bubble. Infrastructure is not an asset class for private investment and profit gains. The role of the ADB as per its Strategy 2030 approach paper demonstrates the Bank’s intentions to shift its portfolio in an attempt to compete in fast tracking loans with the China - led AIIB. While lending rates may go up, the environmental and social risk through private sector operations remain unmitigated.

Consequently, there is no indication on how private sector investments will manifest into particular projects. While bunk loans will flow quickly the Forum fears various dirty energy projects like Coal plants, and heavy handed hydro-projects may push through without public accountability.

To this, Forum reiterates the need for ADB’s open engagement with civil society organizations especially on private sector lending is indispensable in making the Bank more accountable and effective in their lending portfolio. The public has the right to know what sub-projects will surface from financial intermediary lending.

On co-financing with AIIB, Forum executive director Rayyan Hassan further noted that the 2009 Safeguard Policy Statement (SPS) clearly states that the higher standards of Safeguards should apply in any ADB-financed project. In recent times projects such as the Myingyan Gas Project co-financed by IFC, ADB, and AIIB show that various local grievances surrounding environmental degradation, labor violations, and displacement are surfacing. Without clear applications of ADB Safeguards, in this co-financing project, the local people are being left helpless in the face of private sector operators.

“The stringent application of environmental and social safeguards with strong human rights dimension is integral for the ADB to prove that it is indeed a bank for development.”

Moreover, Hassan said the ADB-AIIB co-financing initiative would further underline the glaring gaps in ADB’s delivery mechanism of its safeguards as revealed by the operational review conducted by its own Independent Evaluation Department (IED) in 2014.

He cited the following:

(i)                  Lack of any disclosure and reporting gaps in ADB’s financial intermediary (FI) private sector projects,

(ii)                 Glut increase in category B projects to avoid more stringent environmental and social assessments,

(iii)               poor quality at entry of information in regards to environment, resettlement and indigenous peoples issues pre-project approval, and

(iv)               Lack of clear response on project monitoring by ADB on Safeguards with almost non-existent on site field visit by ADB safeguard staff.      

Hassan further added, “Unfortunately safeguard policies have been perceived by most development actors, especially public and private borrowers as ‘obstacles’ to the path of project implementation. ADB should ensure due diligence in design, implementation, and supervision of its safeguard measures for all projects per the recommendation of the IED; if it intends to be true to its original mandate of poverty alleviation in Asia.”

Forum also expressed serious concern on the shrinking civic space and restriction on civil society especially in countries where ADB operates such as Lao PDR, Uzbekistan, and Azerbaijan.  ADB has no policy on mitigating risk on local communities in conflict zones, and continues to target its lending towards authoritarian regimes.