Funding priority road transport
projects for economic prosperity
IDB Vision and Programmes for Asia,
Africa and Europe
Salim Refas
Transport Economist
Islamic Development Bank
November 28, 2012
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Agenda
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Introduction
Roles of IDB
Drivers of change in the road transport sector
The way forward
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Introduction (i) Roads lead to prosperity
Transport
Infrastructure
Roads are expected to spur economic growth
through three main channels
Capital
accumulation
More infrastructure capital
leads to more production
Productivity gains
Better infrastructure
improves the productivity of
other factors
Spatial impacts
Quality infrastructure attracts
investments
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Introduction (ii) but not all roads lead to prosperity
• Need to understand demand patterns and better prioritize
road investments (from accessibility paradigm to mobility
paradigm)
• Need to systematically complement physical investments by
trade and transport facilitation activities to tackle nonphysical barriers especially at border crossings
• Need to adapt the evaluation of road projects to better assess
the spatial impacts, network effects and indirect economic
benefits (understand the economic geography of transport)
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Roles of IDB (i)
IDB at the crossroads of Africa, Asia and LAS regions
Europe: 2
Asia: 26
Africa: 27
Latin America: 1
• A Unique Model of South-South Cooperation
• 56 members spreading over 4 continents
• 22 countries in 1975 → 56 countries in 2009
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Roles of IDB (ii)
Infrastructure for Growth & Sustainable Development,
2nd pillar of IDB Group new Mid-term business strategy
• funding priority road projects
– More than $4bn of financing for the road
transport sector since inception
– Significant scale-up since IDB Group reform
– Scale-up with other development banks and
private sector participation through PPPs
– Identification of 107 priority transport corridors
in Asia, League of Arab States and Sub-Saharan
Africa (Study on Transport Corridors in OIC
Member Countries, 2011)
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2.9
3.1
2.5
2.1
1.5
1.2
2006
2007
2008by IDB
2009
2010
Infrastructure
financing
Group
in US$2011
Mn
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Roles of IDB (iii)
• facilitating regional integration
– Funding of priority regional corridors in Africa, Asia and LAS, such as the CAREC
corridors in Central Asia, the Trans-Saharan route in Africa, etc.
– Intra-OIC trade promotion and Trade and Transport facilitation activities
– Development of cross-border infrastructure and SEZs
GCC
LAS
League of
Arab States
Gulf Cooperation
Council
ECO
Economic
Cooperation
Organization
AMU
Arab Maghreb
Union
And more
(SAARC, IGAD,
CEN-SAD, etc.)
ECOWAS
Economic
Community of West
African States
UEMOA
West African
Economic and
Monetary Union
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COMESA
Common
Market for
Eastern and
Southern Africa
ASEAN
Association of
Southeast
Asian Nations
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Roles of IDB (iv)
• generating knowledge
Knowledge products financed in part by IDB in 2011-12 in road transport sector
– ECO Priority Road and Rail Routes and Infrastructure Projects Study
– Road Transport and border crossing facilitation in the LAS region
– League of Arab States Truck Accident Causation Feasibility Study
– Program for Infrastructure Development in Africa
– Sub-Saharan Africa Transport Policy Program
…
• promoting cooperation
Landmark developments in 2012
- Creation of the Cooperation and Capacity Development Vice-Presidency
- Expert Group Meeting on inter-regional cooperation to enhance trade
- Scale-up of the reverse linkages activities
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Drivers of change in the road transport sector (i)
Governance
Regulation
Policy
Fin. Mechanisms
PPP
Demography
& society
Finance
Pop. growth
Urbanization
Transportation
systems
Economic growth
Global trade
Energy &
Environment
Economics
Energy availability
Climate change
Technology
ICT
Transport equipment
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Source: adapted from ICF International
(2008), Long Range Strategic Issues
Facing the Transportation Industry
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Drivers of change in the road transport sector (ii)
Some drivers of change in OIC countries
- Huge demographic pressure 1.51 billion total (22.8% of global
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-
population), growing 5 times faster than OECD (2% AGR)
Fast-paced urbanization (42.3% in 2000, 47.4% in 2010)
Increasing reliance on imports (6.1% of total world imports in
1999, 9.2% in 2008)
Sustained economic growth (5.3% in 2010)
Fast-growing car ownership rates
Slow adoption and harmonization of transport regulations (e.g.
only 19 MCs ratified TIR convention and 18 ratified Convention on
Road Signs and Signals)
Low participation of private sector in road financing and O&M
Slow professionalization of the freight transport sector and slow
development of modern logistics (with some exceptions)
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Growing
demand
Policy
challenges
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Drivers of change in the road transport sector (iii)
but change with the same fundamentals
- With around 80% of passenger-km and over 50% of freight-ton km. roads will
remain the backbone of the transport sector in OIC regions
- Road transport remains capital-intensive sector with long-term financing needs
- Closing the infrastructure gap and sustaining quality and safety of roads is still the
main challenge for most developing countries
► Need to scale-up and adapt
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The way forward (i)
Scale-up investment in the road sector
• Network expansion
Road density in OIC MCs is much lower
than global averages. Investment don’t keep pace with
demand growth
• Network upgrading and maintenance
Out of a total road network length of
3.6 million km, only 43% is paved.
Financing road Maintenance is a major challenge
Source: SESRIC, 2011
• Network interconnection
OIC MCs take advantage of their geography
to develop air and maritime transport hubs
but they are poorly connected to their hinterland
Source: Rodrigue, 2010
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The way forward (ii)
Adapt to changing context
(i) adapt to socio-economic priorities
IDB Differentiated regional approaches
Employment Generation
CIT & Albania
Sustainability & Inclusiveness
Asia+Surinam
Enhancing “Software”* for Economic Growth
SSA
Value-Adding Productivity
Connectivity: Physical & Knowledge
Arab states
*with a view on enhancing human capital productivity and innovation capacity
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The way forward (iii)
(ii) adapt to changing patterns of global trade
Focus on projects and activities to improve
logistics performance of member countries
and integrate global supply chains
The supply chain of hard drive assembly in Thailand,
Source: Chen, 2009
Source: SESRIC, 2011
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The way forward (iv)
(iii) adapt to local challenges using international best
practices and experience of other member countries
Ex1: Bus Rapid Transit
?
Curitiba, Brazil
Curitiba, Brazil (1974)
Istanbul, Turkey (2007)
Ex2: Trade and transport facilitation
• Experience of Turkey in the management of modern border posts
• Experience of Malaysia and Senegal in Single-Windows
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The way forward (v)
(iv) Integrate !!
► integration within and between different modes of transport
for optimal efficiency
port-hinterland connections and rail-road intermodal transport
► integration with the environment for optimal sustainability
green transport and land-use planning
► integration with industrial/trade strategies for optimal impact
national logistics strategies
► integration between all stakeholders for optimal synergies
role of the private sector in financing roads and providing trucking
and logistics services, role of regional and international institutions
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The way forward (v)
Insights on IDB strategy
Scale-up
Effective delivery
Knowledge generation
and Innovation
Connectivity
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Growth of activities at 10-15% p.a.
Scale-up financing through partnerships and
resource mobilization (e.g. from private sector)
•
Operational excellence and results-based
management
Development of a new IDB transport policy
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Mainstreaming of innovation in IDB activities
Development of knowledge-based services
Strengthening of partnerships with expert
institutions and global initiatives (e.g. road safety)
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Institutionalization of Capacity Development and
Reverse Linkages
Enhanced dialogue with regional institutions and
promotion of inter-regional cooperation
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Sustainability
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Strategic focus on sustainability issues
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Conclusion
The two-way road
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Roads spur production, increase productivity and attract investments
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But roads also kill, pollute and crowd-out resources
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Successfully developing and maintaining road infrastructure is a major
socioeconomic development challenge that requires sound strategic planning and
economic evaluation, efficient resource mobilization, effective delivery and
adaptation to international best practices and changing context.
IDB at the service of its member countries to face together these challenges
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Thank you
‫شكرا‬
Salim Refas
srefas@isdb.org
Islamic Development Bank
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