UK support to help Asia’s poorest people

04 February 2010

The UK Government pledged support for the poorest people in Asia and the Pacific with an increase in funding for the region’s development bank.

Mike Foster, Development Minister, announced that the UK - through its Department for International Development (DFID) - will purchase the full UK allocation of new shares in the Asian Development Bank, following Parliamentary approval.

The money raised by the Asian Development Bank will be used to fund schemes such as helping people in Bangladesh to adapt to the effects of climate change by supporting cleaner energy initiatives and opening up mobile phone access in Afghanistan to improve opportunities for trade and business in the region.

Although the Asia-Pacific region has achieved rapid economic growth over the past few years, about 900 million people still live on less than $1.25 a day. Asia was particularly badly hit by the global financial recession, and in some countries the excellent progress made over the last decade has been reversed.  Many still lag behind in key areas like education and health.

The Government’s commitment to buy additional shares comes in response to the Asian Development Bank’s need for a General Capital Increase to address this problem.

The shares will help to meet the bank’s growing demand for investment and development in order to address the economic, social and climate change challenges that the continent currently faces. Global estimates indicate developing countries alone will need $100 billion per year to adapt to the impacts of climate change by 2020.

Mike Foster, who confirmed the purchase, said:

“Developing countries were particularly badly hit by the recent economic crisis and over 60 million people in Asia remain desperately poor as a result.

“The Asian Development Bank has made a significant contribution to tackling poverty across the region and I am pleased to reaffirm the Government’s commitment to helping it finance development where it is needed most.”

The Asian Development Bank is a major lending institution that provides grants and loans to countries across Asia. The bank’s ordinary capital resource allows it to lend money at near-market rates to lower and middle income countries and for private sector operations that focus on poverty reduction.

ADB President Haruhiko Kuroda said:

"The General Capital Increase has helped ADB respond quickly to the impacts of the global economic crisis on our developing member countries. In the medium to long run it will allow ADB to meet key development challenges facing the region, including poverty reduction and climate change. We are grateful to the United Kingdom for its continued support for poverty reduction work in Asia and the Pacific."

The Department for International Development currently holds just over 2 percent of shares in the Asian Development Bank, and it has worked with it since 1966. The bank estimates that every £1 invested in shares has resulted in £13 being invested in development.