The ADB takes a close

look at its SPDMCs

A number of special difficulties faced by the Asian Development Bank in dealings with South Pacific Developing Member Countries (SPDMCs) are can vassed by journalist Guy Sacer doti in a recent issue of the Hong Kong-based Far Eastern Economic Review.

Pacific Island nations which are ADB members are Papua New Guinea, the Cook Islands, Fiji, Kiribati, Solomon Islands Vanuatu and Western Samoa.

The eight represent slightly more than a quarter of the ADB’s 31 regional members. But while the bank’s operations service a com bined population of 700 million, the SPDMCs, excluding PNG, have a population of a mere 1.3 million, or about 0.19 per cent of that.

Sacerdoti effectively excludes PNG from discussion on grounds both of the size of its populaiton (more than three million), and the size of the ADB loans to which it is entitled (a range from SUS4.S million to $13.5 million compared with $330,000 to $4 million for the others).

As seen from ADB headquar ters in Manila, relations with the seven Pacific Island states pre sent difficulties on a number of counts.

Administration: “The admin strative costs for the ADB in setting up and monitoring these smaller loans are higher in abso lute terms (given greater dis tances from Manila), let alone in proportional terms to the bor rowed amounts, than those of its

programs elsewhere . . . The

sheer cost of travel for ADB personnel and consultants has been prohibitive, taking up a full 15 per cent of the entire ADB travel budget for lending equal to 2.2 per cent (including Papua New Guinea) of the bank total.”

Communications: “A number of borrowers, as well as the ADB itself, have complained of the time lag involved in getting let ters and other important docu ments back and forth between the island countries and the ADB head office in Manila; a regional office should shorten the time

span significantly.”

Absorptive capacity: “One nagging problem likely to be taken up (though just how is uncertain) is the limited absorp tive capacity many countries have for ADB lending . . .

Technical assistance loans will continue to be stressed, primarily owing to local manpower con straints . . . But while that will continue, the main problem with ADB lending to the region the intense lack of human resources will probably be the most significant addition to the ADB repertoire. The ADB has found that even when compared to countries such as Bangladesh and Nepal, where the lack of exper tise and training in developemt is at least recognised, the level of education and opportunities for higher education among the SPDMCs is dismal.

“While the problem is less acute in the Polynesian islands of Western Samoa and Tonga, where non-govemmental organ isations such as the Christian churches have been active in education, there is far more of a

brain-drain problem (primarily to

the United States and New Zea land) than in the Melanesian states of Papua New Guinea, Vanuatu and Solomon Islands (where the educated return, but usually to the private sector). But

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the human-resource base for de velopment purposes is scant in deed. In Vanuatu, for example, the chief of development plan ning is South Korean, the central bank governor is British and the deputy governor French.

“Here, the ADB is likely to pursue some type of scholar ship/training program over the long term, utilising the Universi ty of the South Pacific and prob ably institutions in East and Southeast Asia to begin the long process towards building the hu man resources necessary to help these South Pacific island

economies grow.”

On May 31 this year the ADB announced a detailed study to define an overall approach to the SPDMCs, with some action ex pected to be taken before the end of the year. A key part of the study relates to the establishment of an ADB office in the region.

Sacerdoti notes: “A battle among the SPDMCs is inevitable over the seat of the regional office, with five of the eight countries vying for the privilege.

While Port Moresby may want to maintain its image as leader of the grouping, Fiji may make more sense logistically, as Suva already has a European Econom ic Community office and a Un ited Nations Development Prog ram office, as well as the reg ion’s best seat for higher educa tion, the University of the South Pacific”.