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‘ADB looking to partner with India on DPIs in its projects’


New Delhi: Asian Development Bank (ADB) intends to partner with India to promote digital public infrastructure (DPI) in its projects to help improve the impact of development projects and bridge the digital divide that has become the new face of inequality, said director-general of strategy, policy and partnerships Tomoyuki Kimura. In an interview ahead of the G20 leaders’ summit in New Delhi, Kimura backed the need for reforms of multilateral development banks and financial institutions, noting that ADB had already embarked on reorganizing itself to become Asia Pacific’s climate bank. Edited excerpts:

The World Bank has lauded India’s DPIs. What’s ADB’s view on DPI as a means to augment inclusion, financial and otherwise? Is there a possibility of multilateral institutions like ADB actually adopting infrastructures like DPI?

The digital divide is actually the new face of inequality in the region and globally. Digital connectivity is an enabler, allowing remote learning to work and, teleconsultation and e-commerce, among other things. This transformation in Asia and the Pacific has now been fully achieved due to limited access to affordable and high-quality digital connectivity. So, we see a great opportunity for us to basically promote DPI through our project. We have a dedicated digital team in Manila; they’re working on individual projects to see if there’s any possibility to use digital technology to embed digital components so that the project actually generates better development impact, taking advantage of digital technology and then eventually helping address this inequality because of the digital divide.

Within that, is the India model being considered, or do you think it can be a good fit?

Yes, I believe so. Because this digital technology is really a major driver for India’s economic growth, I think there’s a huge opportunity, actually, for ADB to learn from industry experience and also partner with India in this area. There’s already some discussion going on.

What are reasonable changes that can be undertaken on reforming multilateral development banks (MDBs) as suggested by Larry Summers and N.K. Singh’s report?

Firstly, it’s very clear that the challenges we’re facing in this region and globally are immense, including climate change, pandemic and natural disasters. So, a lot of development banks can and must take bold actions to help address these challenges. So, we welcome the inputs from all parties to ensure MDBs are well-equipped to play this role, and we appreciate this report by an expert panel group. The report advocates the evolution of the MDB business model, not just in terms of financing but also in terms of its mandate and operational mechanism. Following the recommendation by an independent G20 panel on the MDB capital adequacy framework, which was issued last year during the Indonesian G20 presidency, we’re now working to stretch our balance sheet. We have proposed to reduce the prudential level of capitalization to the board; if approved, absolutely, it will lead to a significant increase in our lending capacity for the next decade and then beyond. The report talks about MDB’s operation mechanism. This year, we launched our new operating model after three years of preparation. This is a major organizational transformation, including reorganization, business process reforms, and accelerated decentralization, which enables an ADB to increase its capacity as the region’s climate bank. This report emphasized the importance of MDB working as a system. I think this is a very reasonable proposal, although it still requires support from the shareholders of individual MDBs.

Besides reforms, the G20 is also discussing the need for modernizing MDBs, moving beyond post-World War institutions.

There are two sides to this issue. One is whether the current multilateral system is actually working well or not, and if not, why don’t we create a new one? I’m not sure that will be a good idea…[T]he global community basically should try to strengthen the current system of MDBs, pushing us to do more reforms so that our current MDB system can become more fit in the current global context. The second is that in shareholding issues, the emerging major economies, particularly from the south, perhaps want their voices to be more reflected in the current system. That’s something very difficult for me to comment on.

ADB is pivoting to become a climate finance institution. How much is it willing to spend on climate finance or sustainable finance in developing nations? Have the spending targets changed amid climate conditions becoming more uncertain?

When we actually prepared the Strategy 2030 back in 2018, we set a quantitative target of climate finance of $80 billion on a cumulative basis until 2030. But in 2021, actually, we increased it to $100 billion. About one-third of this is basically aimed at supporting climate adaptation. We are trying to mobilize an additional maximum of $30 billion in private capital by leveraging the $100 billion of financing.

How can the private sector be engaged more in climate financing? Are incentives the only way?

The expert panel group report also confirmed that a huge amount of additional financing is required to address these global challenges towards 2030. MDBs alone cannot meet these financing needs. While we need to ramp up our own lending capacity through the implementation of barriers, capital adequacy, framework, and recommendation measures, we definitely need to make an extra effort to crowd in and mobilize more private sector investment at the project level. So, for that, we have to basically ramp up our project development project structuring, and also, we need to co-invest and co-finance with the private sector and de-risk the project, taking advantage of MDBs’ unique position and strength, and also we have to further promote so-called blended financing. We also have to ramp up our support to the developing country government in terms of domestic resource mobilization through policy advice, technical assistance and capacity development.

How does the inclusion of the African Union into G20 change the discourse for Global South and for MDBs when they view emerging economies?

The Indian G20 presidency this year provides an excellent opportunity for India to spearhead a collective approach to address multiple, complex and interconnected global issues while placing up and centre the aspirations and needs of the developing world. So, in that context, it really makes sense for G20 to bring up more stakeholders reflecting the voice from the wider range of the developing world. From MDB’s point of view, the World Bank covers the world, ADB covers the Asia Pacific, and there’s African Development Bank and Inter-American. We always try to share knowledge so that we can learn from each other. This kind of synergy definitely could happen at the G20 level by bringing those new stakeholders from outside the region.

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Updated: 09 Sep 2023, 12:32 AM IST

Joanna Swanson

Joanna Swanson is Europe correspondent at the Thomson Reuters Foundation based in Brussels covering politics, culture, business, climate change, society, economies and inclusive tech. With specific focus in breaking news, she has covered some of the world's most significant stories.