IN.426-17 21 November 2017 Validation Report Philippines: Country Partnership Strategy Final Review Validation, 2011–2016 The attached report is circulated at the request of the Director General, Independent Evaluation Department. The report is also being made publicly available. For Inquiries: Marvin Taylor-Dormond, Independent Evaluation Department (Ext. 5953) Nathan Subramaniam, Independent Evaluation Department (Ext. 5730) Marco Gatti, Independent Evaluation Department (Ext. 5094) CPS Final Philippines Review Country Partnership Strategy Final Validation Review Validation, 2011–2016 Independent Evaluation Raising development impact through evaluation Validation Report November 2017 Philippines: Country Partnership Strategy Final Review Validation, 2011–2016 This document is being disclosed to the public in accordance with ADB’s Public Communications Policy 2011. Reference Number: FRV: PHI 2017-14 Independent Evaluation: VR-27 NOTES (i) The fiscal year (FY) of the Government of the Philippines ends on 31 December. (ii) In this report, “$” refers to US dollars. (iii) For an explanation of rating descriptions used in ADB evaluation reports, see ADB. 2015. 2015 Guidelines for the Preparation of Country Assistance Program Evaluations and Country Partnership Strategy Final Review Validations. Manila. Director General Marvin Taylor-Dormond, Independent Evaluation Department (IED) Director Nathan Subramaniam, IED Team leader Marco Gatti, Principal Evaluation Specialist, IED Team members Enrico Pinali, Senior Evaluation Specialist, IED Ari Perdana, Evaluation Specialist, IED Lawrence Nelson Guevara, Evaluation Officer, IED Rosel Isidro-Cajilig, Senior Evaluation Assistant, IED The guidelines formally adopted by the Independent Evaluation Department (IED) on avoiding conflict of interest in its independent evaluations were observed in the preparation of this report. To the knowledge of IED management, 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 IED does not intend to make any judgments as to the legal or other status of any territory or area. Abbreviations – Pantawid Pamilyang Pilipino Program (Conditional Cash 4Ps Transfer Program) ADB – Asian Development Bank ADF – Asian Development Fund ARMM – Autonomous Region in Muslim Mindanao ASEAN – Association of Southeast Asian Nations BIMP- – Brunei-Indonesia-Malaysia-Philippines East ASEAN Growth EAGA Area CAPE – country assistance program evaluation CDD – community-driven development CCT – conditional cash transfer COBP – country operations business plan CPS – country partnership strategy CPSFR – country partnership strategy final review DOF – Department of Finance EIRR – economic internal rate of return FY – financial year GCR – Global Competitiveness Report (World Economic Forum) GDP – gross domestic product IED – Independent Evaluation Department IREM – integrated natural resources and environmental management KALAHI- – Kapit-Bisig Laban sa Kahirapan (Comprehensive and CIDSS Integrated Delivery of Social Service) KC-NCDDP – KALAHI-CIDSS (National Community Driven Development Project) LGFBR – local government finance and budget reform LGU – local government unit M&E – monitoring and evaluation NEDA – National Economic Development Authority NGO – nongovernment organization NRT – net resource transfer NSO – nonsovereign operations PBL – policy-based lending PCR – project completion report PDP – Philippines Development Plan PESO – Public Employment Service Office PPER – project performance evaluation report PPP – public–private partnership PPTA – project preparatory technical assistance PSM – public sector management PVR – project validation report RCI – regional cooperation and integration RRP – report and recommendations of the president SAPE – sector assistance program evaluation SERD – Southeast Asia Regional Department SLA – sustainable livelihood approach TA – technical assistance TCR – technical assistance completion report TOR – terms of reference TVET – technical and vocational education and training UNDP – United Nations Development Programme XARR – extended annual review report Currency Equivalents (as of 14 November 2017) Currency Unit – Philippine pesos (₱) ₱1.00 = $00.1953 $1.00 = ₱51.1970 Contents Page Acknowledgments vii Executive Summary ix Chapter 1: Rationale and Context 1 A. Validation Purpose and Rationale 1 B. Country Context 2 C. Government Development Plans in the Context of the CPS 2011–2016 6 D. Country Partnership Strategy and ADB Portfolio 8 Chapter 2: Validation of the Country Partnership Strategy Final Review 13 A. Relevance 13 B. Efficiency 18 C. Effectiveness 23 D. Sustainability 29 E. Development Impacts 31 F. ADB and Borrower Performance 35 G. Overall Assessment 38 Chapter 3: Key Lessons and Recommendations 40 A. Lessons Learned 40 B. Recommendations 42 APPENDIXES 46 1. Ongoing and Completed Program during the Country Partnership Strategy Final Review Period (2011–2016): Loans, Grants, and Nonsovereign Investment Facilities 47 2. Ongoing and Completed Program during the Country Partnership Strategy Final Review Period (2011–2016): Technical Assistance 52 3. Planned Versus Actual Loans to the Philippines 57 4. Validation Comments on Sector Outcome Achievements 60 5. 2008 Philippines Country Assistance Program Evaluation (CAPE) Recommendations and the Country Partnership Strategy (CPS), 2011– 2016 Response 63 Acknowledgments This validation report is a product of the Independent Evaluation Department (IED) of the Asian Development Bank (ADB). The validation was led by Marco Gatti. Team members were Enrico Pinali, Ari Perdana, Lawrence Nelson Guevara and Rosel Isidro- Cajilig. Gabriele Ferrazzi, Magdalena Casuga, Ma. Isabel Corpuz, and Jonathaniel Principe were the consultants. Valuable inputs and comments at various stages were received from Professor David Jay Green (external peer reviewer), Joanne Asquith, and Tomoo Ueda (internal commenters). The report benefited from the overall guidance of Nathan Subramaniam, Veronique Salze-Lozac'h, Walter Kolkma, and Marvin Taylor-Dormond. For their time and opinions, the team would like to thank the officials and representatives interviewed in the Philippines from the Department of Finance, Department of Interior and Local Government, Department of Public Works and Highways, the National Economic and Development Authority; local government units from the provinces of Leyte, Eastern Samar, Bohol, Misamis Oriental, Palawan, Davao, and Cebu; implementation units; and nongovernment organizations. The team is also grateful to ADB staff in Manila who made themselves available for interviews, as well as to staff from ADB’s Philippines country office who provided invaluable inputs and facilitated the field work for this validation. Their inputs strengthened the evidence base for this report. Nevertheless, IED remains fully responsible for the report. Executive Summary Asian Development Bank’s country partnership strategy (CPS), 2011–2016 was designed to support the Philippines to achieve high, inclusive, and sustainable growth. The CPS promoted four program objectives: (i) improved investment climate and private sector development; (ii) more efficient, effective, and equitable social services delivery; (iii) reduced environmental degradation and vulnerability to climate change and disasters; and (iv) strengthened governance and reduced corruption. From 2011 to 2016, ADB approved a total portfolio of $4.78 billion which were focused on public sector management, education, infrastructure and finance. Overall, the validation assessed the program successful on the borderline, with the ratings of relevant, less than effective, efficient, likely sustainable, and less than satisfactory development impact. Both ADB and borrower performance was assessed satisfactory. The validation provided five recommendations, three strategic and two operational, for consideration in preparing the next CPS. For strategic recommendations: (i) Scale up ADB work in Mindanao; (ii) Support local government units (LGUs) to enhance their financing capabilities; and (iii) Link nonsovereign lending more tightly to CPS objectives. For the operational recommendations, (iv) ADB should consider establishing a local presence in Mindanao; and (v) Weave education sector work more effectively into social protection support. The Independent Evaluation Department 2016. In addition, this validation also (IED) of ADB has validated the country reviewed projects that were approved partnership strategy final review (CPSFR) before 2011 but that were still active and prepared by the Southeast Asia implemented during the validation period. Department for the Philippines country partnership strategy (CPS), 2011–2016. Country Context The validation assessment relied primarily on information presented in the CPSFR, Solid economic and social development consultations with ADB staff involved with performance in recent years. Over the the CPS preparation and operations, period 2011–2016, the Philippines’ gross consultations with various stakeholders domestic product (GDP) grew on average during independent evaluation missions, by 6.1% a year, outpacing those of most critical reviews of relevant project of the Philippines’ neighbors during the documents, reports (including project same period. Macroeconomic evaluation and validation reports) and fundamentals also improved