Countries in fragile and conflict-affected situations and small island developing states have long faced challenges from weak governance and underdeveloped institutions to geographical remoteness, making development progress difficult. The onset of the pandemic has seen poverty, unemployment, and food insecurity increase, while highlighting problems like limited social safety nets, weak health systems, and gender inequality.
Many small island developing states, which rely heavily on tourism for national income, have seen the industry come to a virtual halt. Government finances have also come under severe strain in most vulnerable countries, limiting the ability of governments to step in. In just one case, the Lao People’s Democratic Republic, expects its fiscal deficit to widen from 3.7% of gross domestic product to around 5.8%, as a result of COVID-19.
An increase in the number and severity of extreme weather events and other impacts linked to climate change such as sea level rises, meanwhile, continue to threaten livelihoods and even force large-scale displacements of populations in some low-lying island states.
A New Development Approach
ADB classifies 11 of its developing member countries as in fragile and conflict-affected situations, while 16 developing member countries identify themselves as small island developing states. Eight of the small island developing states are also classified as in fragile and conflict-affected situations. The two groups, while sharing some common characteristics, also have different challenges and needs. Those in the fragile and conflict-affected situations category face shorter-term issues centered around weak governance, economic insecurity, political instability and conflict, while smaller island developing states face longer-term problems stemming from their remoteness, small populations, narrowly based economies, and high vulnerability to climate change and disasters.
ADB operations in at-risk countries in the past have been less successful than in other developing member countries, as project designs were not always context-sensitive and vulnerable developing member countries had to follow processes and procedures which did not always reflect their specific needs.
ADB introduced the Fragile and Conflict-Affected Situations and Small Island Developing States Approach in 2021 to improve the effectiveness of its work in its most vulnerable developing member countries.
The new approach is being implemented under an action plan for 2021 to 2025 which aims to strengthen ADB responsiveness to country needs; increase its institutional capacity for operations in fragile and conflict-affected situations and small island developing states; and expand understanding of individual country contexts.
“The FSA will change the way ADB designs, implements, and monitors projects in its most fragile developing member countries,” said ADB Advisor for Fragile and Conflict-Affected Situations, Samuel Tumiwa. “This will be done by expanding training for staff to work more effectively in these countries and through the introduction of tools such as fragility and resilience assessments that will provide project planners and country teams with a comprehensive overview of risks and factors that affect resilience, such as climate change, weak governance, and conflict.”
In Papua New Guinea, a fragility and resilience assessment found that weaknesses in governance, service delivery, and the performance of state-owned enterprises was undermining development progress. In response, ADB’s country partnership strategy with Papua New Guinea for 2021 to 2025 recommends extra support to strengthen institutions and public financial management, and to reform state-owned enterprises. This assessment was prepared with wide stakeholder inputs that included civil society, faith-based organizations, and local chiefs and elders.
Responding to COVID-19
ADB’s response to the pandemic has shown its ability to act rapidly and flexibly to a crisis. Along with scaling up financing resources, ADB has cut processing times for COVID-19- related projects and increased grant support.
In Timor-Leste, the ADB-administered COVID-19 Security Emergency Response Project provided farm-to-table food distribution to thousands of needy households, underpinning food and nutrition security, while helping to boost immunity and slow the spread of COVID-19. The grant project helped more than 1,000 farmers and food suppliers who have been hit hard by restrictions on movement which hampered their ability to sell their goods in local markets and cut their household income.
And an ADB regional technical assistance project, which includes a number of countries in fragile and conflict-affected situations, along with small island developing states, is helping civil society organizations provide services aimed at mitigating and preventing the spread of COVID-19, as well as extending social protection and livelihood support for vulnerable groups.
Building Climate and Disaster Resilience
Helping build resilience in developing member countries, particularly small island developing states which are extremely vulnerable to climate change and natural hazards, is another ADB priority.
That vulnerability was brought into stark relief on the 15th of January 2022 when the eruption of an undersea volcano near the main island of Tonga triggered a devastating tsunami which caused several deaths and widespread destruction to parts of the country.
ADB moved swiftly to respond, approving a $10 million grant within a week of the disaster to assist with early recovery and relief and to help restore life-sustaining services. The quick-disbursing finance comes from ADB’s Pacific Disaster Resilience Program, which covers 10 Pacific Island countries, providing timely assistance to respond to emergencies and reduce the indirect economic and social costs after disasters.
For the longer term, ADB has already carried out climate change and disaster risk management assessments for the 12 smallest Pacific island countries as part of a new 5-year strategy for the region, which aims to increase their capabilities to respond to economic shocks and climate-related stresses. In 2021, ADB committed to increase investments in climate adaptation and resilience to $9 billion.
New Innovations
Providing innovative financing and technology solutions to help countries in fragile and conflict-affected situations and small island developing states to make development progress is another important ADB goal. ADB will use novel project modalities, financing instruments and cofinancing partnerships to develop bankable projects.
In Tonga, the first private sector-led solar power project, currently under construction, will tap a new credit enhancement mechanism developed by ADB’s Pacific Department and the Private Sector Operations Department. ADB’s increasing use of the Pacific Renewable Energy Investment Facility is also helping it to streamline and improve internal procedures for small- value projects in SIDS, resulting in faster implementation and lower transaction costs.
And drawing on digital solutions to improve the monitoring of projects in countries affected by conflict, or which are geographically remote, is another tool ADB is making use of. The Nauru Sustainable and Climate-Resilient Connectivity Project, for example, is using drones and other digital technologies to gather data.
COVID-19 and climate change have undermined headway on the global Sustainable Development Goals, which underpin ADB’s Strategy 2030 agenda. By putting in place a new operational approach for supporting countries in fragile and conflict-affected situations and small island developing states, ADB will be better placed to help them meet and overcome both current obstacles, as well as longer-term challenges to development progress.
Source: Asian Development Bank