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 1. Home
 2. Asian Development Bank (ADB)


ASIAN DEVELOPMENT BANK (ADB)

Summary: 

Organizational profile:

The Asian Development Bank (ADB) assists its members, and partners, by providing
loans, technical assistance, grants, and equity investments to promote social
and economic development in the Asia Pacific region. ADB maximizes the
development impact of its assistance by facilitating policy dialogues, providing
advisory services, and mobilizing financial resources through cofinancing
operations that tap official, commercial, and export credit sources.

Responding to the evolving needs of developing member countries (DMCs) and the
Asia and Pacific region as a whole, ADB offers a range of public sector loans
and grants that differ in purpose, focus, financing and disbursements, and
implementation arrangements. Investment lending pays for goods, works and
services related to specific projects, and project loans are the most ADB's
commonly used modality. 

Most of ADB's lending comes from its ordinary capital resources (OCR), offered
at near-market terms to lower- to middle-income countries—and beginning in
2017—at very low interest rates to lower income countries. The Asian Development
Fund (ADF) offers grants that help reduce poverty in ADB's poorest borrowing
countries. ADB also partners with the private sector by investing in smaller,
riskier projects that are innovative, complex, and in challenging markets and
sectors through financing programs such as the Trade and Supply Chain Finance
Program.

ADB is working across Asia and the Pacific to support sustainable forest
management and conservation efforts, as well as agricultural land use
improvements, to promote carbon conservation. ADB’s approach to land and forest
management helps support local livelihoods, strengthens resilience to climate
change, maintains clean water, and protects biodiversity.

ADB offers loans, grants, and technical assistance from Special Funds, Trust
Funds, and other sources to help reduce poverty in Asia’s poorest countries. 

The Climate Change Fund (CCF) was established in May 2008 to facilitate greater
investments in DMCs to effectively address the causes and consequences of
climate change, by strengthening support to low-carbon and climate-resilient
development in DMCs. The fund provides financing through: grant component of
investments, technical assistance (stand-alone and piggy-back or linked to
loan), and direct charge. It has three components: (i) adaptation, (ii) clean
energy development, and (iii) reduced emissions from deforestation and forest
degradation, and improved land use management (REDD+ and land use).

Financing Instrument: Loans, Technical Assistance, Grants, Equity

Project scale:

Loans for forestry related projects have included a US$40 million and US$200
million project. Grants for technical assistance to forest-related projects have
ranged from US$250,000 to US$800,000.

CCF allocations for forest-related projects have ranged from US$800,000 to
US$1,250,000.

Applicable geographical regions/country groups: Asia and the Pacific

Eligibility Criteria:

For sovereign loans, ADB uses a classification system to determine the
eligibility of developing member countries (DMCs) to borrow based on two main
criteria, (i) per capita income and (ii) creditworthiness. DMCs are classified
into:

 * Group A (Concessional assistance-only): those in need of greatest
   concessionality and eligible for Asian Development Fund (ADF) grants
 * Group B (OCR blend): those that need some concessionality, and
 * Group C (Regular OCR only): those in need of least concessionality.

DMCs within these groups are further differentiated to determine the mix of
funds and lending terms they can access, based on ADB’s (i) concessional
assistance policy and (ii) policy on diversified financing terms (effective
2021).

To be eligible for ADB non-sovereign financing, the proposed recipient must be:

 * (i) an entity wholly owned or controlled by one or more private entities
 * (ii) an entity, wholly owned or controlled by a sovereign, undertaking
   commercial activities (sub-sovereign and other public sector entities)
 * (iii) an entity, partially owned or controlled by one or more private
   entities and a sovereign, undertaking commercial activities
 * (iv) a local government or other sub-sovereign entity (including
   municipalities and other forms of local government) that can contract and
   obtain financing independently from the sovereign

All DMCs are eligible to receive CCF resources. The following types of
activities may qualify for the fund's support:

 * Preparation of relevant strategies or action plans for DMCs
 * Investment in climate change mitigation or adaptation measures
 * Development of knowledge products and services related to climate change
 * Facilitating knowledge management activities, including regional conferences
   and workshops
 * Funding to off-set ADB’s corporate carbon footprint

 Application guidelines:

The various stages that a public sector project goes through, from country
programming, project design, to project completion, and evaluation are known
collectively as the ADB project cycle.

 1. Country Partnership Strategy: ADB works with each developing member country
    to define a medium-term development strategy and operational program called
    a country partnership strategy (CPS). The CPS is aligned with the country's
    development plan and poverty reduction goals, and its preparation with the
    DMC's development planning cycle. ADB conducts thematic and sector analyses
    and assessment studies in preparation for a new CPS. These will be posted on
    ADB's web site as available. A CPS is developed in close consultation with
    the government and other country stakeholders including civil society,
    nongovernment organizations, private sector, as well as the country's other
    development partners. The CPS is posted on ADB's web site at the same time
    they are circulated to ADB's Board of Directors for endorsement, subject to
    the country's consent.
 2. Project Identification/Preparation: ADB often provides grants called
    project/program preparatory technical assistance (PPTA) to help the
    government identify and prepare feasible projects. During the early stage of
    the PPTA, a flagging exercise—called an initial poverty and social
    analysis—is conducted to identify those people who may be beneficially or
    adversely affected. A technical assistance report is prepared as a
    recommendation for ADB to finance a technical assistance project.
 3. Approval: The draft loan agreement and draft project proposal is submitted
    to all parties involved including the Government for review. Feedback is
    collected, and the Government is then called for negotiation with ADB.
 4. Implementation: ADB-assisted projects are implemented by the executing
    agency according to the agreed schedule and procedures. A project
    administration manual sets out the project's implementation agreements and
    details.
 5. Completion and Evaluation: After the project facilities and technical
    assistance activities are completed, ADB prepares a completion report to
    document the implementation experience. These reports are prepared within
    12-24 months of the completion of the project.

For private sector financing, there is no standard form of application for ADB
assistance. However, ADB would need some basic information to evaluate a
project, including an executive summary, project description, feasibility study,
background on sponsors, project ownership structure, projects' implementation
arrangements, projects operations, the market, environmental and social aspects,
cost estimates, financing plan, financial model, risk analysis, and permits and
licenses. The credit approval process involves a preliminary review, concept
review, transaction review, final review, management or board approval, then
closing.
For private sector (non-sovereign) finance, there is no standard form of
application for ADB assistance. However, ADB would need some basic information
to evaluate a project.

A list of information requirements for new infrastructure projects that require
ADB assistance can be found here
https://www.adb.org/what-we-do/private-sector-financing/applying-assistance.
These requirements may be amended according to the nature of the project for
which ADB assistance is being sought.

Climate Change Fund procedure: Project proposals are submitted by ADB user
departments to the Climate Change Steering Committee through the fund
secretariat. Project proposals are reviewed by the working groups (i.e.,
Adaptation and Land Use Working Group and Clean Energy Working Group) who
provide the recommendations on the applications for the fund allocation to the
CCSC. The CCSC approves the fund allocations to projects. In general,
applications are reviewed in six batches and are due on 31 January, 31 March, 31
May, 31 July, 30 September, and 30 November. Direct charge applications are
reviewed on ongoing basis. For more information on the CCF, visit
https://www.adb.org/what-we-do/funds/climate-change-fund 

Last updated: 7 September 2023




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Publication Date
Thursday, 01 April 2021

Applicable location
Asia
Oceania

Topic/Theme
Climate change
Biodiversity conservation
Forest conservation and management
Agroforestry
Private sector and industry
REDD+
Sustainable land use
Rural development

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