Financing of Transport Infrastructure

Faced with persistent fiscal crises and slow growth prospects, the past decade has seen a dramatic increase in the liberalization of transport policies in developing countries, occasioning a bigger role for private operators and investors in transport infrastructure.

For the both the government and the private sector, this should have meant a change in their fundamental roles in transport infrastructure provision, and to a certain extent, it has, as evidenced by the different modes of public and private sector partnerships. However, the movement of private finance into infrastructure has been slow, accounting for only 30 percent of total infrastructure investment, with much of this figure concentrated in a small number of countries (Pernia 2003, in Weiss, 2003).

Private finance has likewise been problematic. The private sector has no effective mechanism to deal with issues such as right of way and resettlement. In most cases, the private sector is interested in investing in transport projects only when they can also benefit from land and property development along the new transport route. Therefore, private sector investments have been more extensive and successful in large urban cities or peri-urban populated areas. The track record of success has been in projects such as mass transit systems and tollroads.

Experience points to the fact that government is likely to continue to play a key role in transport infrastructure while new and innovative modes of financing will have to be tested.

Comment(s)

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1. Anura Widana
   (posted 28 April 2010 / 07:19:56 PM)
   
   Excellent study, hats off to authors!
   Wish to add three more reasons why poor have not benefited from investments on infrastructure.
   a) In the planning process, the poor people were not identified and planning itself was undertaken poor exclusive
   b) The method/s adopted to rehabilitate/ build infrastructure have not been pro-poor. The implementation team decided to get construction work done through private contractors or politicized institutions both of which did not pay attention to poor in the area. Their main interest was to maximize profits for themselves from investments. Hence, poor lost the opportunity to work in construction and thereby could not benefit by way of wages.
   c) The design teams did not include poverty/social but technical specialists only. This made it difficult for implementers to identify poor people, to plan strategies to get them involved and to brain-storm on other projects/activities to be funded so that poor people benefit more from investments.
2. Mohammad Ziaul Ahsan
   (posted 23 April 2006 / 09:49:14 PM)
   
   Transport not only makes econmic development but also saves climate. This book has given us such path to make sustainable development for poverty eradication. Thanking you for your great participation.