Opportunity to invest in developing world

Ireland is the newest member of the Asian Development Bank and despite austerity and hardship last year contributed $27m (€20m) to help fund facilities in developing countries.

But very few know about the bank and fewer still have availed of the opportunities it offers Irish businesses through bidding for work and procurement activities in a region where investment rates averaged 35% of GDP.

Companies with experience of working in the developing world, as many Irish have in Africa and eastern Europe, should not find it too difficult to realise opportunities in the region that is the fastest growing globally, says Stephen Groff, vice president of the bank.

Asian Development Bank has been around for 45 years, headquartered in Manila and funded by 67 countries mainly in Asia but also Europe and the US. Its aim is to provide reasonably cheap money, mainly for infrastructure, in countries varying from the least developed to those that are at a medium stage of development. It funded projects worth almost $22bn in 2011.

Their ultimate aim is the elimination of poverty in Asia and the Pacific and in the five years to 2010 the number of people living below the $1.25 a day poverty line fell by 430m. But it still remains home to nearly half the world’s extreme poor, points out Mr Groff, who is not a banker by profession but an expert in development. He is responsible for operations in east and south-east Asia and the Pacific, investments of about $5bn a year and an existing portfolio of about $23bn, and a staff of 650.

In fact in some places, such as urban areas of China, inequality indicators have risen more than a third over the past 20 years, while in many nations the infant mortality rate is ten times higher than in developed countries.

Mr Groff says that the kind of growth and industrialisation in Asia is not enough to roll back poverty as the future prosperity of the region requires greater equality with the raising of living standards among all their peoples.

“We fear that some of the countries could become caught in the mid-income trap like some of those in Latin America, where you cannot climb out of this status. There are risks of instability if the poor are disenfranchised and are not benefiting, it undermines the social system and sustainability of these countries,” he says.

“This is primarily an issue for governments — those countries that invest in health and education alongside policies that result in growth at the same time have had more success. This is the advice we provide,” he said. The bank, like the European Development Bank, has sociologists, engineers, gender experts and environmental scientists and not just economists on its staff, working as a team to ensure that developments they fund are beneficial all around.

Governments must also provide a level of social protection. Mr Groff believes that the level of social protection must be linked not only to affordability, but also to national culture.

He cautions that while politicians and others demand almost instant results, this does not happen in the real world. Myanmar, the former Burma, for instance, will take about 20 years before it catches up with where neighbouring Thailand is now because of the paucity of education and all the other foundation elements of a successful economy.