After its creation in the 1960s, the AfDB focused much of its aid on food production and rural development. At that time, Asia was one of the poorest regions in the world. [18] In the 1970s, afDB assistance to developing countries in Asia expanded to include education and health, followed by infrastructure and industry. The gradual emergence of Asian economies in the second half of the decade has spurred demand for better infrastructure to support economic growth. When the world suffered its first oil shock, the AfDB devoted more of its aid to supporting energy projects, particularly to promote the development of domestic energy sources in member countries. [18] As early as 1956, Japanese Finance Minister Hisato Ichimada had proposed to US Secretary of State John Foster Dulles that development projects in Southeast Asia be supported by a new financial institution for the region. A year later, Japanese Prime Minister Nobusuke Kishi announced that Japan intended to support the establishment of a regional development fund, the funds of which come mainly from Japan and other industrialized countries. But the United States did not follow the plan and the concept was put on the record. See the full report in „Banking on the Future of Asia and the Pacific: 50 Years of the Asian Development Bank“, July 2017. The idea resurfaced in late 1962 when Kaoru Ohashi, an economist at a research institute in Tokyo, visited Takeshi Watanabe, then a private financial advisor in Tokyo, and proposed a study group to create a development bank for the Asian region. The group met regularly in 1963, discussed various scenarios for the creation of a new institution, and drew on Watanabe`s experience with the World Bank. However, the idea was coldly received by the World Bank itself and the task force was discouraged.
The Board of Governors also elects the President of the Bank, who is Chairman of the Board of Directors and heads the AfDB. The President has a five-year term and may be re-elected. Traditionally, and because Japan is one of the bank`s largest shareholders, the president has always been Japanese. After significant pressure from the Reagan administration in the 1980s, the AfDB began reluctantly working with the private sector to increase the impact of its development assistance on poor countries in Asia and the Pacific. Following the second oil crisis, the AfDB extended its support to energy projects. In 1982, the AfDB opened its first field office in Bangladesh and, later in the same decade, expanded its work with non-governmental organizations (NGOs). [18] It has been criticized that major AfDB projects cause social and environmental damage due to a lack of oversight. One of the most controversial projects related to the AfDB is the Mae Moh coal-fired power plant in Thailand.
Environmental and human rights activists argue that the AfDB`s environmental protection policies, as well as the policy for indigenous peoples and involuntary resettlement, although they generally meet international standards on paper, are often ignored in practice, are too vague or weak to be effective. or simply not enforced by bank officials. [53] [54] The AfDB defines itself as a social development organization committed to poverty reduction in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth and regional integration. This is done through investments – in the form of loans, grants and information sharing – in infrastructure, health services, financial and public governance systems that help countries prepare for the effects of climate change or better manage their natural resources, as well as in other areas. Oxfam Australia has criticised the Asian Development Bank for its insensitivity to local communities. „These banks, operating globally and internationally, can undermine people`s human rights through projects that have a negative impact on poor and marginalized communities. [51] The bank has also been criticized by the United Nations Environment Programme, which said in a report that „much of the growth has bypassed more than 70 percent of the rural population, many of whom depend directly on natural resources for their livelihoods and incomes.“ [52] The AfDB cooperates with other development organizations on certain projects to increase the amount of funds available. In 2014, $9.2 billion – nearly half – of the AfDB`s $22.9 billion in operations were financed by other organizations. [37] According to Jason Rush, Senior Communications Specialist, the Bank communicates with many other multilateral organizations. The AfDB offers „hard“ loans on commercial terms mainly to middle-income countries in Asia and „subsidized“ loans at lower interest rates to the poorest countries in the region. Based on a new policy, both types of loans will come from the Bank`s ordinary capital resources (OCR) from January 2017, which act as a general operating fund.
[31] Japanese Presidents Inoue Shiro (1972-76) and Yoshida Taroichi (1976-81) were in the spotlight in the 1970s. Fujioka Masao, the fourth president (1981-90), adopted a confident leadership style and launched an ambitious plan to make the AfDB an influential development agency. More than 50 partnership financing mechanisms, trust funds and other funds – a total of several billion per year – are managed by the AfDB and used for projects to promote social and economic development in Asia and the Pacific. [38] The AfDB raised Rs 5 billion, or about Rs 500 crore, through the issuance of 5-year offshore bonds in Indian Rupee (INR). As intensive work was underway in 1966 to prepare for the opening of the new bank in Manila, the election of the president was at the top of the agenda. Japanese Prime Minister Eisaku Satō asked Watanabe to introduce himself. Although he initially refused, the pressure came from other countries and Watanabe agreed. In the absence of other candidates, Watanabe was elected the first President of the Asian Development Bank at its constituent meeting on November 24, 1966. As the main player in the concept, Japan hoped that the AfDB`s offices would be located in Tokyo. However, eight other cities had also expressed interest – Bangkok, Colombo, Kabul, Kuala Lumpur, Manila, Phnom Penh, Singapore and Tehran.
To decide, the 18 future regional members of the new bank held three rounds of voting at a ministerial conference in Manila in November/December 1965. In the first round on 30 November, Tokyo was unable to obtain a majority, so a second round of voting was held the following day at noon. Although Japan was in the lead, it was still inconclusive, so after lunch a final vote was held. In the third election, Tokyo won eight votes to nine in Manila, with one abstention. Therefore, Manila was declared the host of the new development bank. The Japanese were confused and deeply disappointed. Watanabe later wrote in his personal history of the AfDB: „I felt that the child I had raised so carefully had been abducted in a distant land.“ (Asian Development Bank publication, „Towards a New Asia“, 1977, p. 16) The Bank`s highest political decision-making body is the Board of Governors, composed of one representative from each Member State. The Board of Governors, in turn, elects the twelve members of the Board of Directors and their alternates from among itself. Eight of the twelve members come from regional (Asia-Pacific) members, while the rest come from non-regional members. [11] In the early years of the 2000s, there was a dramatic expansion of private sector financing.
While the institution had been conducting such operations since the 1980s (under pressure from the Reagan administration), early attempts at low credit volumes, large losses, and financial scandals related to a unit called AFIC were very unsuccessful. .