For the first time, the annual meeting of the Asian Development Bank (ADB) is being held in Germany. The ADB’s German governor, Hans-Joachim Fuchtel, spoke to DW about the bank’s work and its objectives.
The Asian Development Bank wants to contribute to the reduction of poverty in the Asia-Pacific region. In doing so, its lending conforms to the UN Millennium Development Goals. What has been achieved so far? How do the people in the Asia-Pacific region tangibly profit from the ADB’s work?
For people to work their way out of poverty, they need access to electricity, water, transport, healthcare and education. The ADB provides around $14 billion (€12.6 billion) a year in loans for these key sectors.
The ADB often makes approving loans contingent upon certain conditions to assure long-term financial feasibility. An example for this is the introduction of a functioning payment system for electricity customers. From 2010 to 2014 alone, ADB loans have given 2.5 million homes access to electricity and 6.3 million homes access to clean water.
Furthermore, 76,000 kilometers of road were built or restored. And it isn’t just the local economy that profits from better transportation infrastructure, the people on the ground profit as well: they can access schools, hospitals or workplaces more easily and thus take advantage of new opportunities.
The ADB also helps people in the region quickly and unbureaucratically in case of natural disasters. When the strong earthquake in Nepal made hundreds of thousands of people homeless from one day to the next, the ADB provided $3 million for immediate relief efforts and additional loans of $240 million to finance the rebuilding efforts.
Surely there must be areas where you see a need for improvement. What would they be?
It’s clear the bank has to put more emphasis on financing sustainable development projects. With the directive to double the investments in combating climate change during the next four years, the bank is already striving for sustainability. But I still see more potential there, especially with private investment.
We know that the public funds will be far from sufficient to win against climate change. The ADB has to get the private sector on board even more. What are particularly needed are innovative financial products that are attractive to private investors. The "green bonds," which the ADB issued for the first time, are a step in the right direction - we still need many more of them.
Are there even enough projects that are suitable for promotion?
The need for investments and reforms continues to be enormous, both in the large newly industrializing countries as well as in Asia’s poorer countries. At the same time, fundable projects are a major bottleneck.
That’s because many countries don’t have sufficient know-how and resources to conduct elaborate technical feasibility studies and to provide authoritative cost-benefit analyses needed for complex large-scale projects like constructing a subway system. The ADB, just like other development banks, helps precisely with that.
This year, the ADB is celebrating its 60th anniversary. But the competition is growing. The Chinese, for example, have founded the Asian Infrastructure Investment Bank (AIIB), which Germany is part of. Is there even enough room for two Asian development banks?
Estimates say that Asia will need $800 billion a year just for infrastructure. More than 1.6 billion people in Asia still live on less than $2 a day. So it can only be in our own interest, if the Asian Infrastructure Investment Bank begins operations. However, we do need to make sure that environmental and social standards apply here as well. As a shareholder, the German government will make sure of that.
Germany is the biggest European shareholder in the ADB. Where does Germany place its emphasis in terms of the bank’s work?
The adoption of the sustainable development goals and the climate conference in Paris give us a clear direction: We don’t merely need to combat poverty but also preserve nature and use it sustainably. Together with the bank, we have launched an initiative for Asia’s fast-growing cities. That way, we can make sure today that the cities of tomorrow grow in a climate-friendly way: good public transportation, energy-efficient public lighting, earthquake-proof houses, to name but a few examples.
As the German governor, I am particularly committed to the bank working harder to ensure compliance with social and environmental standards in the textile industry. Tragedies in textile factories like in Bangladesh’s Rana Plaza have to be avoided in the future. At my initiative, the ADB created a credit line in Bangladesh allowing textile entrepreneurs to make adjustments to their production process to improve environment and worker safety.
This year, Germany hosts the bank’s annual meeting for the first time, which will take place from May 2 to 5 in Frankfurt. Why is that important?
Germany is hosting the annual meeting for the first time since the ADB was founded in 1967. In May 2016, all the relevant financial-policy decision makers from Asia, Europe, the United States and Canada will meet on the fair grounds in Frankfurt. We need to take advantage of this unique opportunity for a new development push. We will start a strategic partnership with the ADB in the climate field and will cooperate more closely on the subject of vocational training.
Furthermore, together with stakeholders from all areas – the finance world, the economy and civil society - we will discuss innovative financial products that are appropriate for the actual needs. In terms of content, we will focus on climate change and energy, sustainable production and supply chains, vocational training and sustainable urban development.
Germany has internationally recognized expertise in these areas and can show that economic success and sustainability can go hand in hand. We give representatives of the entire range of the business world - from start-ups to medium-sized companies to large corporations to the financial world - the opportunity to network with Asian partners.