The Case for a Commercially Managed Road Fund

Since the mid-1990s, a number of countries have restructured the way they finance their road networks. Most progress has been made in developing and transition countries which have moved ahead faster than industrialized countries. There are now notable examples of emerging second generation road funds in several developing countries, including Cameroon, Ghana, Guatemala, Honduras, Malawi, Namibia, Nepal and Zambia. Brazil also has three State level road funds. None are perfect, but many contain features that qualify as examples of emerging “good practice.” Indeed, in many respects, it is the developing countries that invented the concept of financing the road sector as if it was a commercially operated publicly-owned enterprise. The idea of giving the board of the road fund administration the power to set its own tariff level, subject only to a Ministerial “no objection,” was likewise pioneered in the Malawi legislation (though not implemented) and then carried through into the legislation for Namibia. Several other countries are now proposing to follow suit.