Pacific Private Sector Development Initiative
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Performance Pacific Private Sector Evaluation Report Development Initiative Independent Evaluation Raising development impact through evaluation Performance Evaluation Report January 2018 Pacific Private Sector Development Initiative This document is being disclosed to the public in accordance with ADB's Public Communications Policy 2011. Reference Number: TPE:REG 2018-01 Project Numbers: 37662/43048/46510 TA Numbers: 6353/7430/8378 Independent Evaluation: TE-66 NOTES (i) The fiscal year of the Pacific Private Sector Development Initiative ends on 30 June. (ii) In this report, “$” refers to US dollars. Director General Marvin Taylor-Dormond, Independent Evaluation Department (IED) Director Nathan Subramanian, Sector and Project Division, IED Team leader Enrico Pinali, Senior Evaluation Specialist, IED Team members Noel Gamo, Senior Evaluation Officer, IED Jerome Jovellanos, Associate Evaluation Officer, IED Irene Garganta, Associate Evaluation Analyst, IED The guidelines formally adopted by the Independent Evaluation Department on avoiding conflict of interest in its independent evaluations were observed in the preparation of this report. To the knowledge of the management of the Independent Evaluation Department, there were no conflicts of interest of the persons preparing, reviewing, or approving this report. In preparing any evaluation report, or by making any designation of or reference to a particular territory or geographic area in this document, the Independent Evaluation Department does not intend to make any judgments as to the legal or other status of any territory or area. Abbreviations ADB – Asian Development Bank DFAT – Australian Department Foreign Affairs and Trade DMC – developing member country DMF – design and monitoring framework FEMM Forum Economic Ministers' Meeting FSM – Federated States of Micronesia IFC – International Finance Corporation IMF – International Monetary Fund M&E – monitoring and evaluation MFAT – New Zealand Ministry of Foreign Affairs and Trade PFTAC – Pacific Financial Technical Assistance Centre PLCO – Pacific Liaison and Coordination Office PNG – Papua New Guinea PPP – public–private partnership PRIF – Pacific Region Infrastructure Facility PSA – private sector assessment PSD – private sector development PSDI – Pacific Private Sector Development Initiative RMI – Republic of the Marshall Islands RRP – report and recommendation of the President SOE – state-owned enterprise TASU – technical assistance supervising unit Contents Page Acknowledgments vii Basic Data ix Executive Summary xi Chapter 1: Introduction 1 A. Project Overview 1 B. Evaluation Purpose 1 C. Scope, Methodology, and Limitations 2 D. Structure of the Report 6 Chapter 2: Overview of Private Sector Development in the Pacific 7 A. The Private Sector Development Landscape in the Pacific 7 B. Why Private Sector Development? 8 C. Review of ADB Strategies and Operations in the Pacific 8 D. Other ADB PSD-Related Facilities in the Pacific 9 E. Pacific PSD Operations of Other Development Partners 11 Chapter 3: Design and Implementation 14 A. Time, Cost of Financing, and Expenditure 14 B. Focus Areas and Geographic Coverage 15 C. Organization and Operations 16 D. Design and Operational Changes 17 E. Monitoring and Evaluation 17 F. Expected Impacts, Outcomes, and Outputs 18 Chapter 4: Performance Assessment 20 A. Improving the Enabling Business Environment 20 B. Results of PSDI Operations: Access to Finance 35 C. Results of PSDI Operations: Business Law Reform 42 D. Results of PSDI Operations: State-Owned Enterprise Reforms and Public- Private Partnerships 47 E. Results of PSDI Operations: Economic Empowerment of Women 54 Chapter 5: Issues, Conclusions, and Recommendations 59 A. Issues 59 B. Conclusions 61 C. Recommendations 61 APPENDIXES 1. Strategies and Programs for ADB and Other Development Partners Related to Private Sector Development in the Pacific 66 2. Monitoring and Evaluation 73 3. Organization and Operations of the Pacific Private Sector Development Initiative 80 4. Summaries of Country Case Assessments 83 5. Summary of Survey Findings 104 6. Methodology for the Review of PSDI Outputs 107 Acknowledgments This technical assistance performance evaluation report was prepared by a team of staff and consultants from the Independent Evaluation Department (IED). The core team comprised Enrico Pinali (team leader), Noel Gamo, Jerome Jovellanos, and Irene Garganta. Peter van Diermen and Marion Funtila were engaged as consultants and contributed to this report by conducting analysis, desk reviews, interviews, data collection, and research. The report benefited from the guidance of Marvin Taylor- Dormond (Director General, IED) and Nathan Subramanian (Director, Sector and Project Division, IED). The team would like to thank Asian Development Bank staff, staff and consultants of the Pacific Private Sector Development Initiative, and the representatives of relevant stakeholders and other government offices who were interviewed for their time and inputs. The team gratefully acknowledges the feedback from internal commenter Joanne Asquith and external peer reviewers Annmaree O’Keeffe. Basic Data Pacific Private Sector Development Initiative Data TA 6353-REG TA 7430-REG TA 8378-REG Classifications Sector Multisector Multisector Multisector Subsectors FSD FSD, EPAM, L&J, MF FSD, EPAM, L&J, MF Themes PSD, SEG, RCI PSD PSD, SEG, RCI, GE Subthemes PILR, PEEEM PR, PPP, PMS, PR, PPP, PMS, PEEBE, WAM PEEBE, WAM, GEEO Cost Financed by ADB ($ ‘000) Estimated cost 1,100,000 3,000,000 2,000,000 Actual cost 1,100,000 3,000,000 Ongoing Cost Finance by Cofinanciers ($’000) Estimated cost 9,839,350 9,000,000 36,580,000 Actual cost 9,809,554 11,965,413 Ongoing Use of Consultants International Consultants (person- months) 288 497 Ongoing National Consultants (person-months) 131 49 Ongoing Implementing Agency PLCO PLCO PLCO Milestones Board Approval 21 Nov 2006 10 Dec 2009 6 Jun 2013 Signing of TA Agreement 21 Nov 2006 11 Dec 2009 6 Jun 2013 Fielding of Consultants 19 Feb 2007 26 Jan 2010 Expected TA Closing 30 Nov 2011 31 Dec 2013 31 May 2019 Actual TA Financial Closing 31 Jul 2013 31 Mar 2015 Ongoing TCR Circulation Sep 2013 May 2015 ADB = Asian Development Bank, EPAM = economic and public affairs management, FSD = finance sector development, GE = gender equity, GEEO = gender equity in economic opportunities, L&J = law and judiciary, MF = microfinance, PARD = Pacific Department, PEEBE = promoting economic efficiency and enabling business environment, PEEM = promoting economic efficiency and enabling markets, PILR = policy, institutional, and legal reform, PLCO = Pacific Liaison and Coordination Office, PMS = promoting macroeconomic stability, PR = policy reform, PSD = private sector development, RCI = regional cooperation and integration, SEG = sustainable economic growth, TA = technical assistance, TCR = technical assistance completion report, WAM = widening access to markets and economic opportunities Executive Summary This evaluation of the Pacific Private Sector Development Initiative (PSDI), 2007–2017, examines whether the initiative has been successful in improving the enabling business environment of the 14 ADB Pacific developing member countries (DMCs). The program, managed by ADB through its Pacific Liaison and Coordination Office in Sydney, has provided support to Pacific DMC governments in the following areas: access to finance, business law reform, state-owned enterprise (SOE) reforms, public– private partnerships (PPPs), the economic empowerment of women, and competition and consumer protection. These interventions were complemented by analytical work and subprograms on cross- cutting issues. Since 2007, the PSDI has launched 276 subprograms, of which 93 had been completed as of 30 June 2017. From a total of $60.4 million allocated funds, $42.2 million had been disbursed as of 30 June 2017. Of the total funds, ADB provided $6.1 million, Australia $49.8 million, and New Zealand $4.5 million. The evaluation found that, after a decade in operation, PSDI had supported the provision of several important inputs necessary for modern, functioning private sectors in Pacific DMCs. This was achieved in a political economy environment that generally made private sector reforms difficult. Nevertheless, the delivered outputs did not fully achieve the intended outcomes. This is because the provision of building blocks (i.e., outputs) conducive to improving the enabling business environment was not sufficient in itself. In managing the program and delivering value added, ADB did not provide sufficient strategic guidance, thus missing out on opportunities to draw on its knowledge and experience to lead the program. PSDI remains a relevant program and it is well aligned with the needs of the Pacific DMCs. Given its wealth of experience in the Pacific, ADB with support from the cofinancers is best placed to lead a process of refocusing, expansion and increase of the value addition of the program. In order to achieve better outcomes in PSDI, ADB needs to provide greater strategic guidance, review the management model for PSDI, put in place a fully functional M&E system that includes mapping out the results chain of subprograms, and rethink and enhance the focus area on the economic empowerment of women. The Pacific region has experienced low economic Strategy, 2005–2009. In response to low levels growth for decades. From 1970 to 2000, the of growth and the potential of the private sector region’s growth averaged less than 1% per capita to contribute to