Critique on the ADB Private Sector
Development Strategy 1
Nurina Widagdo - Bank Information Center 2
On March 30, 2000, the Asian Development Bank (ADB) released a new private sector
development strategy. The Bank claims that the strategy will strengthen the role of the private
sector as the engine of growth in Asia. According to the ADB, the strategy aims at promoting the
Bank’s role in helping member governments create enabling conditions for business through its
public sector operations. It further claims that the strategy will also guide the Bank to ensure that its
public sector activities do not crowd out the private sector; instead, the Bank will take all possible
steps to open up and increase opportunities of private sector participation. Through the strategy,
the Bank intends to continue to catalyze private investments by the provision of direct financial
assistance to private sector projects that have clear development impacts and/or demonstrable
effects. From the eyes of private investors, this catalyzing role is particularly important because the
ADB’s presence is seen as a source of comfort by other lenders and investors.
The facilitation of the private sector by the multilateral development banks (MDBs)3 is nothing new.
The World Bank has been involved in private sector promotion through its two arms: its private
investment agency, the International Finance Corporation (IFC), since 1956 and its political risk-
guarantee agency, the Multilateral Investment Guarantee Agency (MIGA), since 1988. The ADB has
invested in private sector projects since for about two decades. Strong criticisms on the MDBs’
investment in private sector projects have been widely raised for their lack of direct, measurable
benefits on development and poverty reduction, as well as problems around adverse social and
environmental impacts of the funded projects.
What is new in the MDB – private sector relation is the recently increased importance of MDBs
private sector facilitation. The most criti