Saturday, November 12, 2005

Transport Infrastructure for Poverty Reduction: DAC Povnet at work (R. Schmid, Skat)

After a period when infrastructure needs were given a low priority by many donors, infrastructure is today again high on the international development agenda. It is because more and better economic infrastructure is considered as badly needed to support higher and durable rates of growth, and to foster the involvement of the poor women and men in a growth process that benefits them. If such growth, central to the achievement of the MDGs, is to take place, investment of all sorts needs to rise, particularly those tackling the key bottlenecks to growth. Over the period 1999-2002 about 50 billion US$ have been invested in developing countries in transport infrastructure by bilateral donors (60%) and multilateral development banks (40%) - about 3.5 times more than in the water & sanitation sector. However, there are important issues around the volume, quality, and governance of infrastructure, as well as how those investments can deliver benefits to the poor, which need to be addressed in order to maximise the impact of infrastructure on pro-poor growth.

Transport is perhaps the most important infrastructure sector for poverty reduction and pro-poor growth. It is a key facilitator of development, providing services to other sectors (social, economic) and to other development priorities (regional integration, security, etc.). Recent studies estimate economic return on investment projects in average 80% for roads. To be effective, an interconnected - regional, national, local, community - and multimodal transport network is required. This is far from being the case in most low-income countries. While transport infrastructure - particularly rural roads - demonstrates public good characteristics, transport services are usually provided by the private sector. Services can be charged for (e.g. through fuel tax), but it is more difficult to directly charge beneficiaries for making use of the facility. Transport is costly, particularly in areas with low population density, and its infrastructure has high recurrent costs. Transport investment is politically-sensitive, thus subject to political interests and is often accompanied by negative environmental (e.g. pollution) and health (e.g. spread of HIV/AIDS) externalities which impose a disproportionate toll on the poor. Sector responsibilities usually belong to several ministries, making coordination difficult.

Since 2004, the DAC, through its Network on Poverty Reduction (Povnet), has engaged in an ambitious programme of work on pro-poor growth. Infrastructure, together with private sector development and agriculture, is a key strand of this work. Through a Povnet task team on infrastructure that has drawn on the expertise of donors, developing countries, the private sector and civil society, and through international meetings, DAC Members have analysed why investments in infrastructure fell significantly in the 1990s. They have drawn lessons from the limitations of their earlier approaches and, on that basis, developed a set of guiding principles to guide and promote the contribution of infrastructure to pro-poor growth. These concern (i) the importance of developing country-led frameworks as the basis for coordinated donor support, (ii) enhancing the impact on the poor through more attention to how infrastructure can really benefit them, (iii) enhanced management within the sectors where infrastructure investment takes place, in order to achieve sustainable outcomes, and (iv) ways of enhancing finance and making better use of all financial resources.

The "Guiding principles on infrastructure for poverty reduction", which also address how they apply to different infrastructure sectors, will be published soon as DAC guidelines. They represent a framework for building a broader consensus among donors on how best to support infrastructure's contribution to economic growth and poverty reduction. In the transport sector, the guidelines call the donors to:

  • Support assessments of economic and social rates of return of various projects;
  • Collectively and carefully establish their priorities in their sector assistance strategies;
  • Support sector policy reforms to promote safe, regular and environmentally friendly transport networks;
  • Make sure that their transport interventions include poverty reduction impact (e.g. employment, IMTs);
  • Support long term administrative and financial institutional reforms (particularly in maintenance of roads);
  • Focus on service rather than only infrastructure provision as well as on involvement of the private sector;
  • Validate the high importance of the transport sector for pro-poor growth through adequate investments.

The State Secretariat for Economic Affairs (seco) contributes actively, and the SDC Mobility desk sporadically, to the work of the Povnet task team on infrastructure. For further information, see the Povnet website at


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