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Financing and Management

Introduction

Sustainable financing and management of Rural Transport Infrastructure (RTI) is one of the key challenges in delivery of effective rural transport solutions. Rural road infrastructure is a broad term that usually excludes urban roads and main inter-urban routes. It usually includes village to town routes and embraces Tertiary Rural and Access Roads. These include key inter-village rural roads. These routes are normally the responsibility of local government administrations or regional departments of central government road agencies. The network of rural or local government roads in most countries can typically constitute about 70 percent of the total formal or ‘classified’ national road network. Although in traffic volume terms these routes carry a small proportion of the national traffic, they form a vital infrastructure asset that facilitates nearly all rural social and economic activities. The funding of the maintenance and improvement of these routes is usually provided from a combination of central and local government sources. Typically funding is sub-optimal.

In addition, there is usually a network of village roads and paths - also often known as community roads. These are usually ‘unclassified’ although they are also very important in sustaining rural economies and livelihoods. In most developing countries, the total length of community roads, tracks, trails and paths is largely unknown and not even inventoried. Although surveys indicate that the length of these routes is often about the same or twice the length of the formal/classified rural road network. Most of the community network may be largely used by non-motorised vehicles, pedestrians and motor-bikes and may not be passable by trucks or cars for some part of the year. Typically these roads receive little or no funding.

Institutional options for managing rural road infrastructure

There are countries that have been able to develop a framework for management of their local level roads. While each approach has its advantages and shortcomings, it is worth presenting six typical set-ups.

Centralised model: Involves a centralised rural road agency at the central government with oversight over rural roads on behalf of local government. This has the advantage of providing a national framework for road planning and financing, with a standardized approach and substantial technical capacity. Such bodies can offer good career prospects, training and mentoring for professionals and skilled personnel. Examples include: Department of Feeder Roads (DFR) in Ghana, Local Government Engineering Department (LGED) in Bangladesh, Panchayat Raj Engineering Department (PRED) in many states in India, the District Development Fund (DDF) network in Zimbabwe and the Rural Roads Fund in Colombia. It can have the disadvantage of centralising decision-making processes, and thus offering limited attention to local priorities. In many countries in Africa, Governments are forming agencies specifically mandated to manage rural roads. Rural road agencies are responsible for preparing an inventory and classifying the rural road network including important tracks. This provides a framework for financing of the network through the usage of public funds. The size of the asset can help in making justification and bids for funding.

Decentralised models: This provides a framework for local government departments to manage roads through their own Works Departments. It has the advantage of local knowledge of the network and its needs, and being led by local priorities. However it can be constrained by a shortage of funding, and limited access to technical and quality assurance capacity. Personnel can find difficulty in career mobility and this can discourage professionals from working in some rural areas. Local political preferences can prevent good asset management practices and divert resources away from preserving and enhancing the local road network asset.

Contracting an executing agency through Local Government: Local government departments establish their priorities and contract implementation to a consulting agency. This is common in West Africa through AGETIP (Agence d'Execution des Travaux d'Interet Public) in Mali and Senegal, for example. This model can enhance efficiency by avoiding cumbersome procurement procedures. The major disadvantage is the inherent inefficiency associated with single-sourcing. In addition, AGETIP in West Africa also attracts donor funding which can distort its sustainability.

Establishment of Joint Services Committees (JSC) by Local Government: Adjoining local authorities come together and establish a joint committee to coordinate network maintenance and development in order to overcome the problem of small networks. This enables achievement of economies of scale. These are common in more developed countries such as Canada, Guatemala, New Zealand and the USA.

Micro-enterprises for road maintenance: Groups of farmers from local communities are organised in micro-entreprises (often 8 to 10 people) who are trained on road maintenance. On average, participation of women in such micro-enterprises is reported to be significant. Successful experiences are being carried out in Peru, through its rural roads programme, and in Bolivia, Ecuador and Colombia. The main challenge lies in achieving full sustainability, as through interim arrangements local governments may only be able to cover about 30% of the total required cost and the rest is provided by funding programmes through agencies such as the World Bank and the Inter American Development Bank. Technical support on labour-based intensive work can be provided to local governments by consultants, NGOs and organisations such as ILO ILO PIIE.

Road Associations: In situations of remote locations or lack of government funding for road maintenance, local communities and enterprises can form road associations to manage routes vital for their well being. They can contribute funds or resources and are usually self-managing; buying in or obtaining voluntary technical competence as necessary. Sometimes, government subsidies or crop levies may be available to contribute towards part of the costs. The main advantage of these arrangements is usually a high level of voluntary or subsidised local management, and transparency of the funds and resources used. The associations are also well placed to control access by damaging vehicles, especially in seasons when the road may be weaker and susceptible to damage. These arrangements are common on more developed economies.

Financing Rural Road Infrastructure

Rural road infrastructure is usually funded from central government and sometimes in conjunction with local government funding sources. Specific improvement or rehabilitation funding is sometimes secured from international agencies. Unfortunately, in a limited resource environment typical of developing countries the recurrent (annual) funding is rarely sufficient to maintain the existing road infrastructure, let alone carry out improvements.

Consider that in over a 100 years of global motor transport development, still less than 15% of many developing country road networks are paved or to durable all-weather standard. Projecting this trend, it would take more than 500 years to pave the remainder of the existing rural road networks! We therefore need to be more creative in raising finance and resources for rural transport infrastructure. Firstly the standards, classifications and network coverage of the road, trail and track infrastructure need to be carefully matched to the means of transport that it serves, and not merely ‘borrowed’ from more affluent environments. All sources of possible funding and resourcing, be it central government, local government, community, development agency, NGO, benefactor or road user, or other possibilities need to be investigated. Transparent and justified expenditures and performance assessment of existing allocations would certainly help to attract more funds to the cause of providing equitable access to rural communities.

Key Challenges in rural infrastructure management and financing

  • Determining the most suitable, appropriate and affordable standards in rural infrastructure.
  • Use of locally available materials and other local resources such as labour, skills, enterprises and community resources.
  • In many cases, community level infrastructure lacks legal recognition. As such they are not considered as public assets that can be financed and managed using public funds. Few countries have an institutional framework for the management of community infrastructure. Typically urban-based lawmakers need to facilitate the framework for equitable and affordable rural transport infrastructure and services.
  • The limited organisational and technical capacity that exists at local and village level.
  • Lack of sustainable approach to maintenance: In cases where the central government, NGOs or donor agencies are involved in providing initial capital investments, subsequent maintenance could be a problem. It is common that local governments, which are often charged with maintenance tasks, have not been involved in the investment planning process. Without a clear policy as to who owns the assets and is responsible for the maintenance of RTI, well intended efforts aimed at improving rural access will be short-lived.
  • Integrated planning approaches such as Rural Accessibility Planning that evaluate RTI investment options against other investments, such as in schools, health or water infrastructure.
  • The shortage of funds in rural areas for the purchase of materials and technical support which are not locally available. Mobilising existing and new sources of funds and resources for improved RTI.

Key Resources

Publications

Websites and Online resources

Contributions

If you would like to make a contribution to this topic or help to 'sign-post' any key documents on the topic for gTKP partners and users, please contact Rob Petts: rob.petts@gtkp.com

Updated March 2010