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Infrastructure development in fragile states: is it worth it?
Transport, energy, information and communication technology, and water infrastructure enable a state to grow its economy and improve the quality of life of its citizens. Infrastructure acts as the backbone of growth and social wellbeing – boosting employment, reducing the high costs of accessing markets, providing ways of reaching isolated communities, and ensuring access to basic services.
But is it really worth investing in infrastructure in situations of political instability, weak governance, economic insecurity, conflict and vulnerability to natural disasters? Our experience in the Asian Development Bank (ADB) shows that infrastructure investment can deliver greater economic returns in fragile states, if the work is done right.
Infrastructure development supports statebuilding
Statebuilding in Cambodia began from a very low base after decades of armed conflict, extreme loss of life and capital, and widespread destruction of public institutions. We have been part of Cambodia's transformation since 1992, and we've seen how it has transformed itself from a post-conflict country to a market economy that has achieved steady economic and social development. Our work initially focused on rehabilitation in response to the country's emergency needs in several priority areas: physical infrastructure, social infrastructure, capacity building and institutional strengthening. This focus was later broadened to poverty reduction, broad-based economic growth, inclusive social development and good governance.
To strengthen co-ordination of assistance and improve aid effectiveness, we engage in technical working groups with government institutions, development partners and civil society. We partner with civil society organisations in Cambodia to strengthen the effectiveness, quality, and sustainability of the services they provide. For example, NGOs were engaged to implement a programme on gender capacity development under the Rural Road Improvement Project.
An independent evaluation of the country programme in 2009 concluded that ADB's investment in physical assets and sector reforms boosted connectivity, lowered production costs, and encouraged foreign direct investment.
In Afghanistan, we have provided assistance for the construction or upgrade of roads; rehabilitation of four regional airports; construction of a cross-border railway line; and power generation, transmission, and distribution. A 100km stretch of road is saving and improving lives and enhancing business opportunities in the north of the country. All four of the regional airports are now fully operational. Over 4m tonnes of goods have been transported through the first railway line between Hairatan on the border of Uzbekistan and Mazar-e Sharif, and the line is part of a larger rail network planned across the northern and other regions of the country, including Herat, as well as to Pakistan and Tajikistan. ADB-assisted projects have added 510km of power transmission lines, providing electricity to more than 5 million people.
The security situation in Afghanistan still makes it difficult to implement infrastructure projects. Security concerns also raise costs, partly by reducing consultants' and contractors' interest in implementing projects, limiting competition, and raising quality concerns. The government's lack of capacity to implement projects, such as lack of skilled staff, compounds the problem. We have addressed these by outsourcing project preparation and implementation to design engineers and supervision consultants engaged on long-term contracts.
Turnkey or design/build contracts, whereby the project is turned over only to the government once it is fully operational, are also used to implement large infrastructure schemes rather than separating consultancy and construction, which is common in most ADB-funded initiatives elsewhere. These approaches can yield results without compromising principles of governance, transparency, competition, and efficiency.
Ensuring lasting benefits
Public works in fragile states can provide income and welfare opportunities for people over the short term. However, the longer-term challenge for these same communities must include infrastructure ownership and maintenance. Lack of ownership and maintenance is costly in both an economic and social sense. Failure to manage and maintain infrastructure can contribute to economic and social loss. For example, it is more costly to rebuild than to maintain infrastructures, and reconstruction is often more disruptive to peoples' lives. Early deterioration of infrastructure affects people's lives, limiting their access to health clinics, schools, factories and markets. Preventative maintenance extends the life and reduces the cost of a country's stock of infrastructure.
For example, good management and maintenance has been put in place for all transport projects in the Solomon Islands where the National Transport Fund Act (developed with ADB support) was passed in 2010. This provides a long-term, sustainable mechanism for the rehabilitation and maintenance of transport infrastructure using donor and the government's own funding.
For infrastructure to benefit communities over the longer term, investment and maintenance have to be accompanied by sound government policies, capable institutions, and better governance, including community participation and, therefore, ownership.
While there may be no alternative but to immediately rebuild, create jobs through public works and provide other humanitarian assistance immediately after conflict, these gains need much broader support if they are to be sustained in the longer term. Ownership requires community participation as well as transparent and accountable decisions by government. Both the initial investment and the ongoing financing of maintenance require good management of public finances. And meeting the ever-increasing demand for additional and better infrastructure can only occur within a well-governed growing economy and participating society.