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OFID Quarterly October 2016 - Asia: A New Horizon?

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Asia: Catching the wave of success

As the highest performing region under the Millennium Development Goals, Asia has much to shout about. Among other notable achievements, poverty has been slashed by more than two-thirds, great strides have been made in the delivery of healthcare, and primary school enrolments have surged.

The results are remarkable for a continent that is the largest on earth and home to more than half the world’s population.

Led by China, India and Indonesia, economies across the region are booming—on a platform of structural change, increased productivity and a shift from agriculture to manufacturing. At the same time, greater investment in education has equipped populations with the skills to turn opportunity into advantage.

Riding high on this wave of success, Asia has become the poster child for economic and social transformation.

As impressive as these accomplishments are, however, it’s not all positive news. For the statistics mask stubborn discrepancies among and within countries. Vulnerability to poverty remains high, as does hunger. Some 600 million people are still living without electricity. And, while access to education and health services has improved, there are still questions over equity and quality.

So, while prosperity and a bright new future beckon for the majority, vast numbers of people are being left behind.

Sucked under by the same wave that is sweeping others forward, these groups are mostly the victims of entrenched discrimination and marginalization.

On top of the challenges relating to social welfare and inclusion, the region must also confront the even bigger problems of water scarcity and environmental degradation.

With the lowest per capita renewable water resources in the world and multiplying CO2 emissions, these are probably the most pressing issues of all for the continent.

Tackling them and getting onto a path of long-term sustainable development must be Asia’s priority.

OFID’s association with Asia goes back to August 1976, when balance of payments loans to 10 of the region’s “Most Seriously Affected Countries” were among the first ever batch of approvals by the then-named OPEC Special Fund.

Since then, our cooperation has widened to embrace 40 nations, a diverse group spread across the Middle East, Central Asia, Southeast Asia and the Pacific. Together they have shared a cumulative US$5.7bn in OFID financing for projects covering all economic and social sectors. The list ranges from some of the region’s least developed countries, such as Afghanistan, Myanmar and Yemen, to the transitioning nations of the Commonwealth of Independent States, to the “tiger” economies of China, India and Vietnam.

As elsewhere in the world, our chief objective in Asia is to alleviate poverty among the most vulnerable populations, while promoting economic growth, integration and competitiveness. In doing so, we respect and support the individual priorities of the partner governments. In a continent so diverse, with countries at different points on the development spectrum, a tailored response is essential.

Given the region’s needs—and its potential—it is no coincidence that almost one-half of OFID financing to Asia has gone to the strategically critical energy–water–food nexus. Once the nexus-enabling transportation sector is added, the total comes to around US$3.5bn, or over 60 percent of all approvals to the region. In terms of widening access to safe drinking water, modern and affordable energy, and an adequate food supply, these resources have been well used.

To boost employment, productivity and competitiveness, we have channeled close to US$1bn to the Asian private sector. With the aim of promoting financial inclusion, the bulk of this has gone in support of micro-, small and medium-sized enterprises (MSMEs), a sector that plays a pivotal role in driving growth across the region. We have also provided over US$660m in trade finance to partner countries to help bridge the yawning trade finance gap that is stifling opportunities, especially for MSMEs.

We are aided in our endeavors by a formal partnership agreement with the Asian Development Bank, which sees us cofinance priority projects in specific countries.

All told, OFID is truly proud of its contribution to Asia’s transformation. While modest in the grand scheme of things, our support over the past four decades has made a genuine difference to communities the length and breadth of the continent. From smallholder farmers in Armenia to fisher folk in the Maldives, from schoolchildren in Palestine to commuters in the Laotian capital Vientiane, our work has touched millions.

That said, there is still much left to do, as the region strives to continue its rise while tackling the multiple challenges blocking the way. OFID will remain a steadfast partner on this journey, as we work together to ensure that everyone gets to catch the wave that is Asia’s success.