Learning Curves

IED
April2009

Mongolia:UrbanDevelopment Sector

ThisreportprovidesanindependentassessmentofADBsassistancetotheMongolianurban sectorandidentifieskeyareasforfurtherimprovingtheeffectivenessofitsoperations.The findingsofthereportwillalsobeusedasinputstothebroadercountryassistanceprogram evaluationupdateforMongolia. Thisrapidsectorassessment1findsthatADBcontributedsignificantlytoimprovementsin Mongoliasurbansector.ADBsassistanceforhousingfinanceledtoafledglingmortgage marketthatexceededthesectordevelopmentgoalexpectations.Inaddition,itappearsthat ADBsinterventionshavehadamodestimpact,albeitindirectly,onthereductionofpoverty intheselectedaimagcenters.

neededwater,sanitation,solidwastemanagement,and districtheatingutilityupgrades.ADBpolicies,systems, Theurbandevelopmentsector2inMongoliahas andassistancemodalitieswerealsosuitablewhileits beengreatlyinfluencedbytherapidrateof capacitydevelopmenteffortsweresubstantial.Moreover, urbanizationinthecountryoverthepast10years. ADBsvalueadditionisratedsatisfactory.Intermsof Heighteneddemandbyresidentialandcommercial policyandinstitutionalreforms,theADBurbansector consumersofurbanserviceshasoutstrippedsupply, programhashelpedbetterdefinewaterandwastewater particularlyinUlaanbaatarandinprovincialtowns, tariffneeds,anddeveloptheplatformforthemortgage andhasbecomeaconstrainttothegrowthofeconomic marketinthehousingsector. activityintheseareas.Thereisanurgentneedto ThebottomupassessmentofADBassistanceis expandthephysicalinfrastructureintheurbandeve basedonareviewof5loans,3JapanFundforPoverty lopmentsector,aswellastoimprovethemanagement Reduction(JFPR)grants,and10technicalassistance(TA) andsustainabilityoftheurbaninfrastructurenetwork grants.3Theperformanceoftheurbansectorprogramis tomeetthisdemand. ratedsuccessful.TheJFPRgrantsarehighly SummaryofFindings successful,whileloansandTAgrantsarerated successful.Urbansectoroperationsareratedrelevant TheoverallratingforAsianDevelopmentBank sincethesearegenerallyalignedwithgovernmenturban (ADB)assistanceduringtheevaluationperiodis sectorprioritiesandoftenincludedsectorpolicyand successful,butveryclosetothelowerboundsof institutionalreforms.ADBsurbansectoroperationsare highlysuccessful.Intermsoftopdownassessment (strategicfocus),ADBsurbanstrategyisratedrelevant, ratedaseffective.Threeloansintheurbansectorwere allwelldesignedtomeettheintendedsectoroutcomes. theselectivityofADBsstrategyandprogramisrated Twoloaninterventionsachievedsectoroutcomesfor highlysatisfactory,whilesequencingandcontinuityof improvedaccessofthepoortobasicservicesand thesectorstrategyareratedsatisfactory.Ingeneral, improvedurbanenvironmentalconditionsthrough ADBhasrespondedadequately,flexibly,andina betteraccesstosafewater,sanitation,heating,andsolid timelymannertochangingneedsandgovernment wastecollectionin12aimagcenters.Urbansector requestsforADBassistance.Giventhedeteriorating operationsarealsoratedefficientinviewofthe conditionsofaimagcenterinfrastructure,ADBs generallyhighratesofreturnofprojects,although strategyandprogramrespondedwellbyproviding
Independent Evaluation Department Asian Development Bank 6 ADB Avenue, Mandaluyong City, 1550 Metro Manila, Philippines Tel +63 2 632 4100; Fax +63 2 636 2161; evaluation@adb.org; www.adb.org/evaluation/

Background

numerousimplementationproblemswereencountered inoneproject.However,significantworkstillneedsto bedonetoachievesustainabilityoftheurbansector services.Assuch,urbansectoroperationsarerated lesslikelytobesustainable.TheimpactofADBs urbanassistanceprogramisratedsubstantial.ADBs urbansectorprogramcontributedtoimprovingthe levelofaccesstocleanwaterandsanitation,among otherthings. Althoughtheurbansectorstrategyisrated successful,theassessmentwashinderedbythefactthat thesectoroutcomesandoutputswerenotwell formulatedinthe2005CountryStrategyandProgram. Thereweresomeinconsistenciesbetweenthesector frameworkandsectorroadmap,whilethesector outcomeandoutputindicatorswerenotspecific enoughtobemonitorable.Ingeneral,lessattentionhas beengiventosettinguptheinstitutionsandsystems requiredtoensurethatexistinginfrastructureare properlymaintainedandefficientlyused.Mongolia needstoinstituteaprogramofwiderinstitutional reform.Fullcostrecoveryforwatersupplyand wastewatertreatmenthasnotyetbeenattained,and tariffsettingiscurrentlyhighlypoliticizedandremains heavilyinfluencedbythelocalgovernors.Intheshort term,theGovernmentshouldbeencouragedtoadopt moretransparentandefficientmechanismsfor subsidizingutilities.Inthelongerterm,othermeansof depoliticizingtariffcontrolshouldbepursued.Any nationaltariffproposalshouldbereviewedfor governance,capacity,andimplementation arrangementsattheaimag/centerlevel.Waterand energysavingmeasuresshouldalsobeundertaken. Ontheprojectlevel,factorsaffecting implementationincludedconsultantselectiondelays, procurementdelays,overambitiousimplementation schedules,sectorrestructuringintheenergysector,and issuesrelatingtotheshortsummerconstructionseason. Someprojectshadfrequentchangesofprojectteam leader,whichcouldhaveaffectedproject implementation. Lessonsidentifiedintheevaluationincludetheneed todelegateprojectadministrationtotheresident missiontofurtherenhanceefficiency,andtooptimize synergiesbetweenthevariousADBassistance modalities.
Learning Curves available @ www.adb.org/evaluation/
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Recommendations

Theevaluationmaderecommendationsinrelationto thefollowingstrategicareasofADBsoperationsin Mongolia: Focusmoreontheurbanenvironment.ADBmay considerprovidingassistancefortheformulationof urbanenvironmentplans/programsintheaimag centers.Itmayalsoconsiderincreasingits involvementintacklingUlaanbaatarsurban environmentalissues,possiblythrough collaborationwithotherdevelopmentpartnerson newurbansectorprograms. Increaseaidcoordinationandmakemoreuseof bilateralresources. Formulateamoredetailedsectorroadmap.The nextcountryprogramshouldformulateamore detailedurbandevelopmentsectorroadmapand identifymonitorableindicatorsforeachofthe sectoroutcomesandoutputsthatarelinkedtothe urbanrelatedtheMillenniumDevelopmentGoals targets. Carryonpolicydialoguetoreformdistrictheating services.

Feedback ADBManagementsresponseandtheChairs SummaryoftheDevelopmentEffectiveness CommitteeDiscussionsarenotrequiredforthis evaluation.ThestudywascompletedinOctober2008.

ADB.2008.UrbanDevelopmentSectorinMongolia.Manila. Available:www.adb.org/Documents/Evaluation/CAPES/ MON/CAPEMONUrbanDevelopmentSector.pdf 2 Urbandevelopmentsectorcoverswatersupply,sanitation, solidwaste,districtheating,urbanenvironment,andhousing financeinUlaanbaatarandprovincialtownsconsistingofat least10,000inhabitantsormore.Issuesrelatedtourban transportarenotcoveredinthereport. 3 Theloanprojectsincludedfourcompletedandoneongoing project.Ongoingprojectevaluationisbasedonthereport andrecommendationofthePresident,backtoofficereports, andavailableprojectadministrationindicators.Thus,the evaluationistentative.
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Team Leader: Marco Gatti, Tel +63 2 632 6306, mgatti@adb.org