The ADB in Bangladesh: A Look Back or A Leap Backward?
A Critical Appraisal of the ADB’s Achieving Results Together: 25 years with the Bangladesh Resident Mission
Dhaka, Bangladesh – April 2008
After the World Bank and the Japanese Government, the Asian Development Bank (ADB) is the third largest donor in the Asia-Pacific Region, lending an average of US $5 – $6 billion a year to its developing member countries1. As one of these counties, Bangladesh has always ranked as one of the top borrowers, receiving an average of US $ 362 million per year between 2002-20062. In terms of gross Official Development Aid, the ADB is one of the biggest donors to Bangladesh, surpassed only by the World Bank3. Where has this money gone since the institution of the Bangladesh Resident Mission (BRM), the Bangladesh branch of the ADB, in 1982? What progress has been made, what development accomplished? Those seeking answers to this question must certainly look to the ADB itself.
Last year, the ADB published a report, Achieving Results Together: 25 years with the Bangladesh Resident Mission, painting a rosy picture of its development projects in Bangladesh over the last quarter century. But can we take their rendition at face value? In this brief review, we will examine some of the realities behind the ‘results’.
Private Sector Bias
“ADB’s private sector operations have been oriented to complement public sectoroperations to address critical infrastructure and policy constraints to mobilizing private investment, both domestic and foreign…Commercial co-financing is being explored to enhance financial resources from capital markets and to mitigate political and/or credit risk.” (p. 5)
Bangladesh has cumulatively received over US $ 8 billion in aid from the ADB4, ostensibly earmarked for the ‘public sector’5. Unfortunately, much of this money is used to finance projects supporting private sector growth and trade liberalization. In fact, one of the ADB’s key operational objectives in itsSouth Asia regional Cooperation Strategy is explicitly stated as “promoting private sector cooperation6.” In other words, by “addressing policy constraints,” the ADB proposes to open wideBangladesh’s industries and expose them to the vagaries of the global corporate economy.The ADB “considers private sector development crucial to economic growth, job creation, and poverty reduction7,” despite the fact that the effectiveness (and sincerity) of private investment in reducing poverty is questionable at best. Nonetheless, the ADB continues to pour private capital into the oil, energy,transport, gas, and water sector inBangladesh, taking the control of these public services away from the state and into the hands of corporations:
“ADB’s power subsector strategy for Bangladesh focuses on changing the business environment through corporatization, commercialization, and increasing public–private partnership, institutional improvements in key power sector entities, enlarging the scope for rural electricity supply cooperatives, and strengthening long-term planning and regulatory processes.” (p. 20)
“ADB’s operational focus in the gas sector is to create an enabling environment for private investment, segregate the functions of sector regulation and operation, help make sector entities fully autonomous, strengthen the regulatory framework, rationalizeprices, reduce system losses, and improve efficiency.” (p. 21)
“ADB’s assistance in developing the country’s infrastructure, such as transport, energy, urban infrastructure and utilities, is improving the environment for private investment by enhancing productivity and removing constraints on growth.” (p. 30)
In fact, a little under half of the ADB’s total lending was mobilized through co-financing from multilateral or private sector sources8. With such a large percentage of funds coming from the private sector, the accountability and motivations of the ADB must be called into question. The ADB should serve the people’s interests, not commercial ones. Increasing the private sector’s leverage in development projects continues to have disastrous impacts on the environment and local communities9. Their activities are driven by profit and, historically, have been carried out with little regard for the social and environmental policies of the country in question or even the ADB’s own safeguarding policies10, especially in the case of large infrastructure projects. Economic disparity and marginalization has only increased in the shadow of the ADB’s precious economic growth.
Poverty reduction or production?
“Bangladesh has made impressive progress in reducing poverty and fostering human development over the past 15 years. Poverty incidence declined to 40.0% in 2005 from 48.9% in 2000, showing a decline of 1.8 percentage points a year compared with 1 percentage point a year decline in the preceding decade. The decline in poverty wasfueled by higher gross domestic product (GDP) growth and a steady rise in access of the poor to microcredit, workers’ remittances, and social services.” (p. 12)
Although it is true that poverty in Bangladesh has been slightly alleviated from 15 years ago, to put it in these terms is both misleading and overly optimistic. The fact remains that 41% of the population (62,800,000 people) live on less than one dollar a day, and a staggering 84% (128,700,000 people) live on less than two dollars a day11.
Bangladesh holds the dubious distinction of having 48% of children between 0-5 underweight for their age, the second worst in the world12. A quarter of the population still does not have access to an improved water source, according to the latest UNDP Human Development report13. Faced with these statistics, the ADB must concede that the future isn’t so bright for 128,000,000 people.
Also, poverty is not restricted to a financial definition. Poverty is a multidimensional concept, and people can still suffer deprivation in many aspects of life even with adequate incomes. This type of poverty, called non-income poverty, stems from an inadequate standard of living, rather than a lack of income. People who have limited access to basic services or who suffer social or physical deprivationssuch as the inability to fully participate in communities, disease or under-nutrition fall into this category. In fact, the ADB admits that although it is “on track to meet the Millennium Development Goal (MDG) target of reducing by half the proportion of people living on less than a dollar a day, it is unlikely to meet the MDGs for reducing non-income poverty14.”
By the ADB’s own definition, poverty is characterized by “a deprivation of access to essential goods, services, assets, and opportunities to which every human being is entitled. People should be free from hunger, able to live in peace, and have access to basic education and primary health care services. Poor households have to sustain themselves by their labor and be reasonably rewarded and should have a degree of protection from external shocks. In addition, individuals and societies are also poor— and tend to remain so—if they are not empowered to participate in making the decisions that shape their lives15.” It is ironic, therefore, that the ADB chooses to pursue its poverty reduction strategies in flagrant disregard for this eloquent definition. Thousands of people have been displaced thanks to ADB projects, many without proper compensation or compensation of any kind. Many more can’t afford essential services due to fees pushed up by privatization, and have no voice in the process which forces these policies upon them.
“ADB has also assisted in conserving the environment, creating irrigation systems, fostering small-scale water resources, building flood protection, and ensuring village people’s greater access to markets.” (p .25)
“ADB-assisted projects—such as the Ganges–Kobadak project, Pabna Irrigation and Rural Development Project, and Meghna–Dhonagoda Irrigation Project—have substantially improved flood plain management in Bangladesh.” (p. 26)
Conspicuously absent from this illustrious list, and in fact the report as a whole, are any instance of the Sundarbans Biodiversity Conservation Project, the Khulna Jessore Drainage Rehabilitation Project, or the Phulbari Coal Project. However, these projects should not go unmentioned in any 25-year retrospective of the ADB. I propose the following additions to the list of ADB-backed projects thathave “assisted in conserving the environment”:
1. The Sundarbans Biodiversity Conservation Project was implemented between 1999 and 2006 in the Sundarban region of Bangladesh, home to the largest mangrove forest in the world. It was intended to establish a proper management system tomaintain the biological integrity of the area through poverty alleviation16.The ADB was the major funder of the project, providing US $ 37 million out of the total project cost of US $ 82.2 million17. SBCP’s consultancy budget was managed entirely by the ADB, who allocated 61% of the total expenditure to consultancy18, showing how sincere the ADB was in its objective of poverty reduction. Local people were never properly consulted about the implementation of the project.The project cause widespread protest among the local NGOs and affected communities, who criticised the so-called ‘environmental conservation’ project for failing to take into account the real forces causing damage to the ecosystem. Industrial shrimp farming, which has converted thousands of hectares of agricultural village land to commercially-controlled ponds, has created severe ecological problems and displaced whole communities from their lands19. Instead of addressing this and other issues of biodiversity loss, the SBCP actually encouraged aquaculture practice through micro-credit schemes. The SBCP watch group, formed of local community members and CSOs, was particularly vocal in challenging the injustices of this project and the exploitation of their natural resources.
2. The Khulna Jessore Drainage Rehabilitation Project (KJDRP) began in 1996 in the southwestern coastal districts of Bangladesh as another attempt to address the river drainage problem, the result of a series of earlier donor interventions (including the ADB) to de-link the floodplains from the rivers. Supported by a $33 million ADB loan20, the stated objective of the KJDRP was to upgrade existing flood control embankments and reduce poverty by alleviating river drainage congestion21.To achieve this, they constructed a series of sluice gates and regulators on the rivers in order to protect the wetland areas from tidal and seasonal floods and extend the area suitable for agriculture, against the protests of the local communities who knew from experience (a similar project had been implemented in 1986) that such measures would not solve the problem. They had suggested an alternative concept of tidal river management based on indigenous practices developed over generations. Ultimately, the project was not implemented according to the recommendations of the local people22. As they predicted, heavy siltation and drainage congestionoccurred in the river channels from blocking the natural tidal flow. As a result, silted-up rivers are drying up, indigenous wildlife has been threatened, and thousands of hectares of land have been permanently inundated23. In other words, by the time the project finished in 2004, the ADB achieved the opposite of what it had proposed.
The area is still an ecologically damaged zone.
3. In 1998, Asia Energy corporation, backed by the ADB, requisitioned 59 square kilometres of land for an open-pit coalmine in Phulbari, in Dinajpur districtin the northwest of Bangladesh. The area covers more than a hundred villages, including schools, colleges, roads, railways, and businesses as well as vast crop fields, forest patches and plantations. The open-pit method proposed to mine the huge expanse of coal lying beneath this area would necessitate the eviction of 40,000people and the destruction of their houses24. Over 250,000 people would be directly or indirectly affected by the implementation of this mine25.Open-pit mining also has devastating environmental impacts. With a hollow a thousand feet deep, large pumps are required to suck out underground water for the entire lifetime of the project, leading to desertification of the surrounding area and asevere decrease in tubewell water levels. Air pollution from coal dust and water pollution from mine run-off will contaminate the surrounding area. Once the mine is exhausted and the hollow filled up, the soil will take years, if ever, to become cultivatable again.Asia Energy claimed that Bangladesh would benefit not only from the profit accrued from the mining operation but also from new industries, employment, infrastructure and poverty alleviation. But the reality was clear: a foreign company would become the owner of natural resources and land that rightfully belonged to Bangladesh and its people. Villagers staged a mass action against the project, and criticisms and protests rang out from all corners of civil society, led by the NationalCommittee to Protect Oil, Gas, Mineral Resources and Ports (NC). The ADB recently announced it would pull out from financing for the project26.
* * * * * * * * * *
Although Bangladesh has made significant progress in development in the last few years, whether or not the ADB had a part in this is still up for debate. With almost half of the population (49%) living below the poverty line27 and most public sector industries (water, transport, energy, gas, etc.) being privatized or already privatized, this is hardly the time for the unbridled optimism of the BRM. This 25-year retrospective should not be a pat on the back for the ADB; rather, it should be awake-up call. Considerable change, both at the policy and project implementation level, is needed before the Asian Development Bank can live up to its title.
1 Source: The Bank Information Centre: Unpacking the ADB: A Guide to the AsianDevelopment Bank.
2 Source: ADB Annual Reports, 2002-2006
3 Source: OECD & WB: Bangladesh: Aid at a Glance
4 Source: ADB Annual Reports
5 ADB: Achieving Results Together: 25 years with the Bangladesh Resident Mission, p. 5
7 ADB: Achieving Results Together: 25 years with the Bangladesh Resident Mission, p. 30
8 The Bank Information Centre: Unpacking the ADB: A Guide to the Asian DevelopmentBank
9 NGO Forum on ADB Article: “ADB’s 2020 Strategy Confirms Corporate Bias”
10 The Bank Information Centre: Unpacking the ADB: A Guide to the Asian DevelopmentBank
11 UNDP Human Development Report, 2006-2007:http://hdrstats.undp.org/countries/data_sheets/cty_ds_BGD.html
14 ADB: Asian Development Fund Report, http://www.adb.org/
15 ADB, 2004: Enhancing the Fight Against Poverty in
Asia and the Pacific: The Poverty
Reduction Strategy of the Asian Development Bank, p.1
16 Hossain, J. and Roy, K.,2006: Deserting the Sundarbans – Local People’s Perspectives onADB-GEF-Netherlands funded SBCP. Njera Kori and Unnayan Onneshan.17 http://www.asianpeoplesforum.net/twiki/tiki-download_file.php?fileId=16
18 Hossain, J. and Roy, K.,2006: Deserting the Sundarbans – Local People’s Perspectives onADB-GEF-Netherlands funded SBCP. Njera Kori and Unnayan Onneshan.
20 Source: The Bank Information Centre, 2007: ADB Begins Evaluation of Controversial Khulna-Jessore Project
21 People’s Forum on ADB article, http://www.asianpeoplesforum.net/
22 Source: The Bank Information Centre, 2007: ADB Begins Evaluation of ControversialKhulna-Jessore Project
23 Kibria, Zakir: Impact of Asian Development Bank (ADB) investment in the Water Sectorin
24 Prof. Anu Muhammad: FDI in
Bangladesh and the Phulbari Coal Project
25 SEHD report: Killings in Phulbari Ignite Unstoppable Protest: Local Communities StandStrong against Open Cut Mining26 Press Release: “Asian Development Bank Pulls Out of Controversial Phulbari Coal Projectin
27 UNDP Human Development Report, 2006-2007:http://hdrstats.undp.org/countries/data_sheets/cty_ds_BGD.html