Improving Transparency

The continuing need for attention to good governance and anti-corruption

Takehiko Nakao

Welcome to this year’s celebration of International Anti-Corruption Day. International Anti-Corruption Day has been commemorated annually at the Asian Development Bank (ADB) every year since the United Nations Convention Against Corruption was passed in 2003.

Weak governance and corruption hurt the poor the most. Despite strong economic growth in recent years, the Asia and Pacific region remains home to half of the world’s extreme poor when we use the new poverty threshold of U.S. $1.90 a day, defined as the minimum amount of income needed for life’s necessities. These poor and vulnerable rely most heavily on public services and are often forced to pay bribes to receive those services. Indeed, studies have empirically shown that the portion of income lost to corruption is higher when the household is poor.

Good governance and rule of law contribute to a positive business environment, which in turn supports economic growth and poverty reduction.

ADB is working with our developing member countries (DMCs) to strengthen anti-corruption initiatives, improve regulatory frameworks for a better investment climate, and enhance the involvement of civil society in policy development and implementation.

I am pleased to note that the success rate of our public sector management projects improved from 44 percent in the 1990s to 67 percent in 2014, according to our independent evaluation department. Similarly, the number of projects involving governance and capacity development increased from 53 percent of the ADB-wide total in 2011-2013 to 60 percent in 2012-2014.

Partnerships at the international level are important to build meaningful and lasting change. Last year, ADB joined the Open Government Partnership to promote more transparent, accountable and responsive governments.

ADB also continues to jointly lead the largest network of anti-corruption authorities in Asia and the Pacific through the ADB/Organisation for Economic Co-operation and Development Anti-Corruption Initiative.

Internally, we recently introduced the staff instruction on integrity due diligence for sovereign operations and co-financing. This provides a process for assessing private sector participants in sovereign operations, such as financial intermediaries and co-financiers, to mitigate any governance and corruption risks in our projects.

Sound fiduciary management is indispensable to our procurement and disbursement procedures. While we are implementing the Procurement Reform 10-Point Action Plan to streamline processes and remove any unnecessary burden for implementing agencies and contractors, we have kept our strong anti-corruption and integrity requirements intact.

I would like to explain why fighting corruption and promoting good governance is more important than ever here at ADB.

First, we have raised our financing capacity to as much as U.S. $20 billion per year, or 50 percent more than the previous level. This was made possible by the merger of the Asian Development Fund lending operations with the ordinary capital resources balance sheet. We have also committed to doubling our annual climate financing to U.S. $6 billion by 2020. We must ensure that these additional monies are used effectively and sustainably, and are not diverted by fraud and corruption.

Second, in September 2015, world leaders came together to adopt 17 Sustainable Development Goals (SDGs). Goal 16 promotes just, peaceful and inclusive societies. Two of the targets under Goal 16 are to “substantially reduce corruption and bribery,” and to “develop effective, accountable and transparent institutions at all levels.”

Third, we are starting the preparation of ADB’s new long-term strategy. In this new “Strategy 2030,” to better use our expanded financial capacity and to align our operations with the SDGs, we will further mainstream governance, transparency and anti-corruption into our operations.

Fourth, we are now working on our new operational plan for capacity development for 2016 to 2020. This will provide more support to our DMCs to effectively deliver quality public services and enhance governance.

Fifth, as part of our reform to strengthen our expertise and knowledge, we set up eight thematic groups, including the governance thematic group, as well as seven sector groups. This governance thematic group will contribute to creating and sharing cutting-edge knowledge across departments and with our DMCs and ensure that governance remains an integral part of our operations.

All these initiatives are aimed at ensuring that our efforts regarding anti-corruption and governance count, and that they contribute to fulfilling ADB’s goal to reduce poverty and improve the quality of life in our DMCs.

Today, I pledge to continue to do my part to fight corruption and promote good governance in ADB’s operations. I ask all of you to do the same.

Takehiko Nakao, president of the Asian Development Bank, delivered this introductory speech at the International Anti-Corruption Day 2015 on December 9, 2015, at ADB headquarters, Manila, Philippines. It has been edited to fit this format.