A Decade of Action in Transport - ISBN: 0821370030 - World Bank

ContentsviiixxixiiixixxxiiixxviiAbbreviationsAcknowledgmentsForewordExecutive SummaryManagement Response to IEG RecommendationsChairperson’s Summary: Committee on Development Effectiveness (CODE)Statement of the External Advisory Panel3 1 Study Rationale, Objectives, and Organization3 Role and Nature of Transport5 Evaluation Rationale, Objectives, and Organization5 Evaluation Method9 2 Global Trends, Bank Strategy, and Sector Outcomes9 Global Transport: Trends and Issues11 Foundations and Relevance of the Bank’s Current Transport Strategy13 Update of Sector Priorities14 Sector Outcomes19 3 Bank Support to the Transport Sector19 Trends in Bank Lending to Transport22 Overall Project Performance23 Modal Comparisons27 Regional Lending Trends29 Nonlending Assistance37 4 Promoting Private Sector Involvement37 International Trends in Privatization39 Bank Performance in Encouraging Private Sector Involvement43 Overall Transport Performance47 5 Road Maintenance, Institutional Development, and Environmental Protection47 Maintaining the Assets51 The Importance of Good Governance54 Protecting the Environment59 6 Transport and Poverty59 Rural Transport and Poverty61 Urban Transport and Poverty63 African Transport and Poverty

ABBREVIATIONSAAABOTCAECASCREMADBFOEIBERRESSDESWEUGDPHDM-4IBRDICAOICRIDAIEGIFCIFIIMFIRJNPkmLICUSMDGMIGAMRTNMTOECDOEDPCDPPARPPIPPPPRSPQAGSSATPSSIUAnalytical and advisory assistanceBuild, operate, and transfer projectCountry Assistance EvaluationCountry Assistance StrategyContratos de Recuperación y Mantenimiento (Argentina)Design, build, finance, and operate projectEuropean Investment BankEconomic rate of returnEnvironmentally and Socially Sustainable Development (Network)Economic and sector workEuropean UnionGross domestic productHighway Development and Management SystemInternational Bank for Reconstruction and DevelopmentInternational Civil Aviation OrganizationImplementation Completion ReportInternational Development AssociationIndependent Evaluation GroupInternational Finance CorporationInternational financial institutionInternational Monetary FundIndian RailwaysJawaharlal Nehru PortKilometersLow-income countries under stressMillennium Development GoalMultilateral Investment Guarantee AgencyMinistry of Roads and Transport (Ghana)Nonmotorized transportOrganisation for Economic Co-operation and DevelopmentOperations Evaluation Department (Changed its name to IndependentEvaluation Group [IEG] in December 2005.)Provincial Communication Department (China)Project Performance Assessment ReportPublic-private infrastructurePublic-private partnershipPoverty Reduction Strategy PaperQuality Assurance GroupSub-Saharan Africa Transport Policy ProgramSector Strategy Implementation Updatevii

A DECADE OF ACTION IN TRANSPORTSWApTANROADSTATFTAZARATRCUNWBIWDRWHOSector-Wide ApproachTanzanian Road AgencyTechnical Assistance Trust Funds (IFC)Tanzania-Zambia Railway AuthorityTanzania Railway CorporationUnited NationsWorld Bank InstituteWorld Development ReportWorld Health OrganizationNote: $ = U.S. dollars throughout the report unless otherwise noted. World Bank fiscal yearJuly 1–June 30.viii

AcknowledgmentsThe study would not have been possible withoutthe contributions and support of a great manyindividuals. Peter Freeman was the evaluationmanager and the main author. RamachandraJammi and Kavita Mathur compiled and analyzedthe huge amount of transport-related materialand were involved with all stages of the report.Mr. Jammi in particular prepared both the literatureand portfolio reviews in collaboration withMs. Mathur and was involved in the case studyof Indian transport, organizing a workshop inNew Delhi. William Hurlbut and Heather Dittbrenneredited the report, and Romayne Pereiraprovided administrative support. Country casestudies were prepared by Hernan Levy (Indiaand Tanzania) and Gabriel Siri (Brazil). In eachof these countries a local consultant was alsocommissioned to conduct stakeholder interviewswith a wide range of interested parties. Theinterviews and subsequent analyses were carriedout by Abdul Awadh (Tanzania), Cesar Cavalcanti(Brazil), and Harcharansingh Jamdar (India).Background studies were also prepared byMr. Levy (road maintenance and road funds) andChristopher Willoughby (public and private sectorfinancing).The contributions by the Multilateral InvestmentGuarantee Agency and the International FinanceCorporation, in appendixes C and D, respectively,are gratefully acknowledged. It is appropriate toclarify, however, that this was not a full joint study.An advisory panel of external experts revieweddrafts and served as a sounding board for therecommendations. Thanks are due to panel membersViorica Beldean (Romania), Prof. Ali Huzayyin(Egypt), Pierre Laconte (Belgium), and HenningLauridsen (Norway).Extensive and thorough peer review commentswere received from Prof. Kenneth Gwilliam on theentire work. Useful comments and informationwere provided on the sections on road funds andmaintenance issues by Nils Bruzelius, Prof. IanHeggie, and Gunter Zietlow. The willingness ofstaff at the Inter-American Development Bank(undertaking a transport sector evaluation inLatin America) to exchange ideas and informationis also gratefully acknowledged; special thanksfor this are due to José Pires and Felipe Targa.Finally, the generous financial support of the NorwegianAgency for International Development(Norad) and the suggestions of Agnete Eriksen aregratefully acknowledged.Director-General, Evaluation: Vinod ThomasDirector, Independent Evaluation Group, World Bank: Ajay ChhibberManager, Sector, Thematic, and Global Evaluation: Alain BarbuEvaluation Manager: Peter Freemanix

ForewordThis Independent Evaluation Group (IEG) study evaluates the performanceof the World Bank’s support for the transport sector duringthe period 1995–2005. The findings are intended to feed into the revisionof the Bank’s transport strategy. The analysis is based on a portfolio of 642projects involving transport, of which 284 have closed and been evaluated byIEG. In addition, the report draws on staff and stakeholder interviews, an extensiveliterature survey, and a review of sector analytical and advisory work.The report coincides with a period when Bankcommitments for transport infrastructure aregrowing and when the transport sector faces escalatingdemands to address emerging issues ofan increasingly global nature. Transport expertsworldwide face a growth phenomenon fuelledby expanding human and vehicle populationsand led by intensified demand for the movementof goods. This movement is stimulated by globalizationand trade liberalization. People’s travelneeds are also expanding rapidly, as rising incomeslead to a desire for greater mobility.The challenge for development is to support thishuge growth, but at the same time to amelioratethe negative socioenvironmental impacts of transport.The sector must also look for new opportunitiesfor more sustainable solutions than inthe past. Overlaying the general scenario of economicgrowth is a second phenomenon of rapidurbanization, congestion, pollution, and resourceoveruse. All these elements exacerbate the negativeimpacts of transport investments. Troublingissues include environmental damage, energyefficiency, and implications for climate change,traffic congestion, and transport safety. Thereare also questions relating to affordability andthe logistical challenges of effective multimodaltransportation.Historically, the Bank’s transport sector activitieshave been well managed and effective. Past effortshave focused heavily on intercity highway constructionand rehabilitation. The Bank has madeimportant progress in encouraging private sectorcontracting, especially of maintenance activities.In contrast, there has been more modest successwith institution building and ensuring infrastructuresustainability.Past successes notwithstanding, the time hascome to reassess priorities and develop a revisedxi

A DECADE OF ACTION IN TRANSPORTagenda that better meets emerging challenges.The evolving transport paradigm will require programmatic,cross-cutting, and multisectoral approaches.In this regard, the recent merging of theInfrastructure and the Environmentally and SociallySustainable Development Networks in theBank presents opportunities for getting the mostfrom linkages across these areas. This new paradigmshould enable the transport sector to bettercontribute to the sustainability of Bank effortsto improve the welfare of the people in developingcountries.Vinod ThomasDirector-GeneralEvaluationxii

Executive SummaryThroughout the past decade transport projects have played a pivotal rolein the support of economic development and poverty alleviation. Thisevaluation assesses the Bank’s activities in transport during the period1995–2005 as well as its preparedness to meet emerging challenges. It concludesthat past performance has been well managed and effective, especiallyfor intercity highway construction and rehabilitation, that the Bank’s approachto transport contributed to private sector development particularlythough private contracting of maintenance, that project outcome ratings haveshown a steady improvement since the early 1990s, and that key elements ofthe current strategy—sustainability, private sector involvement, and urban strategy—remainrelevant today.However, the evaluation also concludes that transportmust now focus more attention on confrontingcross-cutting issues such as trafficcongestion, environmental damages, safety, efficiency,and affordability.This focus will necessitate more innovative, multisectoralapproaches to resolve these complexand urgent country and global concerns. TheBank may have to reconsider its priorities to fullyaddress these challenging social, political, andenvironmental issues and shift resources to ensuringefficient multimodal transport, improvedrural linkages, and better urban transport.Over the next 35 years 2.5 billion people will beadded to the current world population of 6.3 billion.In developing countries, much of this growthwill be urban; the number of cities exceeding 1 millioninhabitants is well on track to surge from268 in 2000 to 358 by 2015. This expansion, coupledwith continuing globalization and trade liberalization,is expected to accelerate significantlythe demand for the transportation of both peopleand goods.The motor industry, for example, may have reachedmaturity in the developed markets of North America,Europe, and Japan, but globally it is poised forhuge expansions, led by the motorization of Chinaand India. Within a few years, China will replaceJapan as the second-largest national market afterthe United States; over the next 20 years, more carsmay be built than in the 110-year history of thexiii

A DECADE OF ACTION IN TRANSPORTindustry. Similar growth is expected in the aviationand maritime industries; only railway expansion islikely to be at a slower rate.Although such vibrant growth may appear welcome,the scenario has a darker side as well.Today’s concerns about high fuel prices will inevitablybe magnified. Road transport already accountsfor nearly a quarter of the man-made gasescontributing to climate change. Pollution, noise,ugliness, and wasted time from traffic congestionalso impose substantial societal costs. Marineoil pollution, crowded skies, and security issuesalso add to an increasingly dismal global transportoutlook.In developing countries the problems of congestionand pollution are further compounded bypoor road safety, which has led the World HealthOrganization to declare road safety an internationalpublic health issue. Just over a centuryafter the first motor vehicle-related traffic deathin 1896, 1.2 million people are killed on the roadsannually and 50 million more injured. More than85 percent of these victims are from developingcountries.Public transport offers clear advantages for reducingcongestion and pollution and for increasingsafety. But progress has often been disappointing,because private vehicle users rarely pay the truecosts they impose on society, thus encouragingurban sprawl. At the same time, decentralizedcities with lower population densities and long tripdistances increase the cost of providing publictransport. The urban poor, usually residing on cityperipheries, tend to become marginalized by a lackof accessibility. Meanwhile, the rapid growth ofmegacities is raising concern about worseningair quality, the adverse effects of which fall disproportionatelyon the poor.The Bank’s ResponseTransport accounts for nearly 6 percent of globalgross domestic product. It is thus no surprisethat the Bank has provided more than $30 billion,or well over 15 percent of its total lending commitments,in support of transport projects duringthe past decade. In the past 5 years there hasbeen a scaling up of transport investment as thelink between poverty reduction and transporthas become better understood. It is thereforetimely that the Bank is now updating its strategicapproach to the sector to address some of themore menacing impacts of global transport expansionand can take into account this evaluation,which includes an assessment of the Bank’s readinessto meet such emerging challenges.The World Bank’s current transport strategy isinfluenced by three key documents. The WorldDevelopment Report: Infrastructure for Development,published in 1994, promotes an expandedrole for competitive markets in transport.Sustainable Transport (World Bank 1996) focuseson the need for transport systems to be comprehensivelysustained—economically, environmentally,and socially. Finally, Cities on the Move(World Bank 2002a) focuses on the urban aspectsof transport. The three elements—sustainability,private sector involvement, and urban strategy—all remain relevant today but require adjustmentand a different approach to meet the challengesof the coming decade.Private Sector Involvement BelowExpectationsOptimism was high in the early 1990s that theprivate sector could assume a large part of theresponsibility for funding both transport infrastructureand services. However, market expectationswith respect to infrastructure turned outto be far too ambitious. After a dramatic declineduring the financial instability of the late 1990s,when private sector transport projects in developingcountries were seen as too long term andrisky, confidence returned in 2005 (see figureES.1). Nevertheless, despite a few early highlypublicized failures, important progress was madeinternationally, and successful private concessionswere effected in all modes of transport.Although the outcome of such private investmentin developing countries has been largely positive,transport concessions are still most commonin middle-income countries, such as Argentina,Brazil, China, Mexico, South Africa, and Turkey. Inthese countries the volumes of traffic, especiallyxiv

EXECUTIVE SUMMARYFigure ES.1: Private Sector Investment in the Transport Sector25,000US$ millions20,00015,00010,0005,00001994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005YearSource: World Bank data.for toll roads, are more attractive and there issufficient public sector capacity to engage with theprivate sector. The Bank has nevertheless continuedto encourage private investment even inlower-income countries; it realized that one successfulproject can still have a huge impact on sucheconomies.Port concessions in developing countries havegenerally been successful, as in India, the Republicof Korea, Mauritius, and Poland. Railwayconcessions in general, however, have beenless satisfactory because governments intervenemore often on pricing and labor issues. A Banksupportedrailway concession in Tanzania, for example,had overly restrictive bid conditions andfailed to attract private sector interest. Recently,security has also become an important issue atports, airports, and border crossings.Bank projects featuring private sector concessionshave not grown substantially during thepast decade but have seen modest growth in theInternational Finance Corporation (IFC). Clientsgenerally turn to the Bank Group either for adviceor when an investment is perceived as risky.In recent years, knowledge of how to set up tollroadconcessions has matured, and the Bank isnow able to offer services such as reimbursabletechnical assistance and partial risk guarantees.Where the Bank has supported or facilitated concessions,they have usually been rated satisfactoryor better, for example, roads in China, railways inBrazil, and ports such as Dar-es-Salaam in Tanzaniaand Port Louis in Mauritius.For the foreseeable future, however, the publicsector will continue to be the major owner andoperator of basic transport infrastructure. This istrue especially as the sector is dominated byroads, which have public good characteristics.The Bank increased its commitments for publicsector transport projects once it realized that sufficientprivate sector investment would not beforthcoming. Evidence from Latin America hasshown that a reduction in infrastructure investment(including transport) is associated with economicgrowth and that the gap in infrastructureexpenditure relative to East Asia is widening.The Bank’s most important contribution to involvingthe private sector has been not in outrightprivatization, but through the many road programsin which it has encouraged private contracting.Also influential has been the abolition ofdepartmental construction and maintenance andits insistence on competitive bidding for contracts.It has also had some success in encouragingthe establishment of commercially run roadagencies and the creation of road funds to bringgreater stability into financing recurrent road expenditures,especially in Africa.xv

A DECADE OF ACTION IN TRANSPORTFor railways, many governments are not preparedto agree to long-term concessions, such as in Moroccoand Romania. The Bank nevertheless hasbeen able to help improve accountability andtransparency in financing arrangements, includingopenness about subsidization arrangementsfor noneconomic services and a greater willingnessto divest noncore business components.Although sustainability has improved, at least asreflected in Independent Evaluation Group (IEG)ratings at completion, the current reality is anunderstatement of what is required for truly sustainabletransport infrastructure. This is becausemaintenance tends to have a lower priority forcash-strapped governments, despite good intentions,and because many countries are politicallyunstable—civil unrest can quickly undo all thegood work that has gone before.Mixed Institutional ProgressEffective governance and capacity building areintegral to ensuring sustainability. The transportsector is certainly not immune from corrupt practices,especially in large construction projects.Although the sector’s adherence to Bank guidelinesfor procurement and competitive tenderingpartially constrains the scope for corruption, thesector has until now lacked an explicit anticorruptionstrategy.The Bank has generally had a mixed performancein helping to strengthen client institutions, withmostly modest results in low-income countries (especiallyin Africa) but better results in middleincomecountries. In this regard, most road agenciesand some railway reorganizations rangingfrom Ghana to Côte d’Ivoire have demonstratedgreater effectiveness following Bank-supportedtechnical assistance, but in some other countriesthe results have been less favorable.Training, however, has often been aimed at assistingthe immediate project and thus is lesslikely to have any broader or sustained impact.Often, the timing of training interventions hasnot been synchronized with the organizationalchanges needed to improve public sector performance.Institutional change takes time, and theduration of the project intervention is relativelyshort. Institutional objectives therefore need tobe more realistic and should be pursued incrementallythrough a continuing support programthat extends beyond the transport sector itself.Good Project Performance, LaggingMonitoring and Evaluation EffortsIEG transport project ratings have shown steadyimprovement since the early 1990s. Good balancedportfolio performance has also beenachieved among other things in large countriessuch as Brazil and China and in several smallercountries, including Latvia, Lao People’s DemocraticRepublic, Morocco, Nicaragua, Peru, and Senegal.The rate of improvement overall, however, is lessfavorable when the largest borrowers are excluded;the concentration of transport commitments inChina and India alone has increased from 31 percentto 40 percent of all transport lending over thepast decade.The good economic rates of return and outcomeratings are noteworthy, but the sector has laggedin developing practical performance indicators forthe sector. Progress with monitoring and evaluationis also frequently hampered by a lack of baselineinformation.Performance Difficult to SustainThe volume of commitments is 40 percent highertoday than it was in 2000. Greater productivity inthe financial sense has been achieved, partly becauseof the large contingent of similar intercityhighway projects and the availability of tools forrapid appraisal. Other factors have been the movetoward programmatic lending and increased projectsize. But if transport is to effectively addressthe emerging issues, the question of staff skillsneeds attention.There is evidence from staff interviews and QualityAssurance Group reviews that transport projectsare particularly affected by perverse incentivesagainst staff undertaking highly beneficial yetcomplex projects with valid safeguard damagesrelated to major resettlement, environmental issues,and the presence of multiple stakeholders.In addition, there has been a relative neglect ofxvi

EXECUTIVE SUMMARYknowledge dissemination and sector research,the latter being significantly lower than would beexpected from a sector with such a large projectportfolio.Because the Bank provides just 2 percent of totalinfrastructure spending in developing countries,it needs to try, wherever possible, to make a differenceby demonstrating new approaches. Typicallythis will involve a significant increase in timeand effort, which may mean greater selectivity ofnew projects. Although valuable analytical andadvisory assistance has been carried out in severalcountries, the effort is spread rather thin, andawareness of this high-quality work is often notshared as widely as is warranted. More focus onsuch work is clearly required as an input into futureCountry Assistance Strategies (CASs).Urban Transport, Rural Roads,and Multimodal TransportIncreasingly RelevantThe composition of the transport portfolio (inwhich roads account for nearly 80 percent ofBank transport commitments) is a cause forconcern, if the sector is to remain relevant. Highwayswill continue to be important, and the levelof support should be customized by Region andcountry, but other transport modes and themesare growing in both importance and relevance. Itwill be essential to see transport opportunitieswith a multimodal setting of integrated urbanand rural concerns.Multimodal projects aimed at removing internalas well as cross-border trade barriers can significantlyreduce freight costs. They can help improvethe affordability of consumer goods and rawmaterials for the productive sectors. Linked to this,more projects of a logistical nature involving railand container terminals should be anticipated. Therelevance and impact of multimodal approachesis likely to increase.There are also likely payoffs to projects addressingcomplex urban issues, including congestion,safety, and pollution; projects such as the air qualitymanagement projects in Mexico City and Dhakaand the assistance to China in developing institutionsfor sustainable urban transport will increasinglybe needed. But the number of suchprojects financed by the Bank in recent years hasfallen slightly rather than increasing, as one wouldexpect. A major constraint is lengthy preparationtime, and the lack of support and incentives forstaff to get involved in more intricate projects isanother factor. The Bank’s current restrictionson subsovereign lending are also affecting demandfor urban transport projects.Issues of greater rural linkages, rural productivity,and environmental management are likely tobe of growing importance for poverty alleviation.Recently an indicator was developed to measureaccessibility (important for the Millennium DevelopmentGoals, addressing freedom fromhunger and better health). There now can be amuch more informed debate about the relativepriority of transport improvements when preparingCASs.Emerging ChallengesThe Bank’s existing transport strategy, with itsfocus on sustainability, urban transport, and the encouragementof greater private sector involvement,remains broadly valid. But clean, affordable,and safe transport are important challenges for thecoming decade. Transport has a crucial role inhelping resolve the nexus of issues associatedwith energy, land use, urbanization, and climatechange.Affordability concerns not only the rural and urbanpoor, but also freight economy aimed at improvingcompetitiveness and stronger economicgrowth. This clearly cuts across all transport modesand services. Greater emphasis on safety also canbe strongly justified. It is predicted that by 2020road accidents will become the third-largest contributorto the global burden of mortality and injury.Bank-financed projects have until recentlyrarely addressed road safety holistically. A revisedapproach involving comprehensive multisectorprojects covering education, police, health, publicworks, and other departments is under development.Pedestrians and nonmotorized transportusers have been found to be especially vulnerablein developing urban areas.xvii

A DECADE OF ACTION IN TRANSPORTEspecially in the larger cities, air quality is a seriousconcern as the number of motor vehiclescontinues to grow rapidly, worsening the volumeof emissions. Increased support to urban transportwill provide opportunities to explore reducinglong-term energy demand through trafficmanagement, traffic pricing, limits on the use ofprivate automobiles, and greater support for masstransit systems and public transport in general.The Bank may make increased use of fundingsources such as the Global Environment Facility,the United Nations Environment Program, and carbonfinance initiatives in future years to tacklesome of these important developments.Yet this evaluation shows that past Bank experience,with its relatively narrow, albeit successful, primaryfocus on roads, will be insufficient to providefor the Bank’s future response to these emergingchallenges. Transport is developing into a complexmultisectorial business that will require expertisefrom many different disciplines. The pace of changeis also accelerating, and the next generation ofprojects is expected to have a much more urbanfocus. Although the demand for highways will remainthe core business, it is anticipated that theBank’s clients will increasingly seek support formore complex projects and that this will graduallylead to a significant redeployment of resourcesand a reexamination of priorities. This can be enhancedby the recent merging of the Infrastructureand the Environmentally and Socially SustainableDevelopment Networks. The new priorities willrequire greater focus and innovation to ensurecontinued Bank relevance. A systematic evaluationof the recent experience with multidonorprogrammatic lending initiatives such as Sector-Wide Approaches (SWAps) is expected. In Africa anevaluation of the outcome of the unique Sub-Saharan African Transport Policy Program (SSATP)will also be important to refining future strategy.Overall, the sector is at a crossroads, where it hasa good window of opportunity to attain a higherlevel of relevance and offer a better level of supportto its clients.Recommendations to Bank Management• Ensure that the focus of the Bank’s transportoperations goes beyond intercity highwaysand gives more attention to issues of growingurgency, including air pollution, traffic congestion,safety, affordability, and trade. Thiscould entail a trade-off between a portion of traditionalhighway business and the newer, morecomplex challenges.• Prepare a Bank Group transport strategy witha sixfold emphasis: (i) greater attention to airand water pollution and realizing environmentalgains; (ii) achieving greater synergies acrossrelevant sectors—building on the merging ofthe Bank’s Environmentally and Socially SustainableDevelopment and Infrastructure Networks;(iii) enhancing knowledge sharing andanalytical and advisory services and their contributionto country strategies; (iv) continuingto support private sector participation throughclose coordination among the Bank, IFC, andthe Multilateral Investment Guarantee Agency;(v) increasing attention to governance and corruptionissues; and (vi) redeploying staff andbudget resources accordingly.• Build up the sector’s monitoring and evaluationefforts and align them with the new strategy, includingthrough (i) the development over thenext year of relevant intermediate indicators applicableto the broad range of projects; (ii) thelaunch of an enhanced program of rigorousimpact evaluations for selected programs; (iii)a comprehensive self-evaluation of the experiencewith SWAps within 3 years; and (iv) an independentevaluation of the SSATP programwithin 2 years.xviii

Management Response toIEG RecommendationsManagement expresses its appreciation to the Independent EvaluationGroup (IEG) for the constructive suggestions put forward in this evaluation.Management notes that in general the review is comprehensiveand presents a well-balanced, thoughtful, and fair picture of sectorachievements.IntroductionManagement notes the overall positive findingsfrom the review. Among the review’s importantcontributions are (a) the appropriate priority andprominence given to safety and environmental issues;(b) its observation that although the currentBank sector strategy foundations remain validtoday, they require a measure of adjustment towarda more sector-interlinked approach, an evolutionthat the recent network integration process shouldmake easier to implement; and (c) its set of recommendations,notably on the need to redeploystaff and budget resources in a way commensurateto the challenges at hand.Management agrees with the thrust of theserecommendations and actually feels that the reviewmight have gone further. This analysis providesthe basis to be even more explicit about thefuture perspectives for the transport business,while at the same time fleshing out recommendationsmore specifically—examples are givenbelow. Management’s specific responses are notedin the Management Action Record. The commentsset out here should not be taken as detractingfrom the overall appreciation managementhas for the quality and completeness ofthe IEG review.Management CommentsManagement would first like to note that the IEGreview is timely, as it provides the backdrop forthe transport strategy update under preparation(the current strategy dates to 1996). These generalcomments cover a variety of issues wheremanagement thinks the IEG review might havegone further in strengthening the analysis or coverageand providing more specificity in recommendations,while again acknowledging theoverall quality of the review.Transport at the Core of the Energy, Urbanization,and Climate Change Agendasand Other Multisector Linkages. The reviewrightly highlights the central role of transport inthe nexus of issues associated with energy use,land use, urbanization, and climate change. Thereview, however, might have further developedthe theme of the transport interface with othersectors and thematic areas, such as gender, socialxix

A DECADE OF ACTION IN TRANSPORTinclusion, and health. It might have shown in particularhow much the Bank’s transport work is actuallyalready moving more into a multisectorbusiness.Fiscal Space. Although it is briefly mentioned,management believes that the review might havefurther addressed the issue of fiscal space. Fiscalspace issues tend to disproportionately affectthe transport sector in many countries. Thereare important questions around fiscal space andthe problem of undermaintenance of transportrelatedassets and, ultimately, the potential forforegone competitiveness, sustainable growth,and poverty reduction.Greater Differentiation across ReviewPeriods. The review could have been more explicitin differentiating across time periods, basedon the level of corporate attention given to the sector.Especially during the middle years of the reviewperiod, there were mixed corporate signalson the overall importance of infrastructure, includingtransport, for the Bank Group’s work,up to the adoption in 2003 of the InfrastructureAction Plan (World Bank 2003a). Rebuilding skillsand strengthening the lending pipeline underthe Action Plan took some time, especially in Europeand Central Asia.Client Perspective. The review is understandablyorganized around sector accountability withinthe World Bank Group. It may have been usefulin the review to put a greater emphasis on understandingthe client demand side of the business.In particular, management believes that itneeds to give great weight in strategy developmentto what client countries perceive as the key issuesand what they say they need from the Bank withintheir transport sector.Governance and Anticorruption. Managementthinks the review could have acknowledgedmore strongly the lead role taken by transport tomainstream and innovate on matters of anticorruption.The anticorruption frameworks set up fortransport projects in the Bank’s East Asia and PacificRegion, for instance, were groundbreaking effortsin this area.ConclusionsNotwithstanding the comments above, managementfinds this review to be a very useful overviewof the Bank’s performance in the transport sector.It has served as a reference document for the ongoingstrategy update and will continue to do soduring strategy implementation. It reinforces management’sviews of the importance of further linkingthe Bank’s transport work with other relevantsectors. That interlinkage is key to leveraging thetransport sector’s contribution to helping countriesachieve their Millennium Development Goals.Strong support from the Bank on transport andits interlinkages can help enhance global productivityas part of partner countries’ strategies toincrease growth and reduce poverty. Management’sresponses to IEG’s specific recommendationsare given in the Management Action Record.xx

MANAGEMENT RESPONSE TO IEG RECOMMENDATIONSManagement Action RecordIEG recommendation1. Ensure that the focus of the Bank’s transportoperations goes beyond intercity highways and givesmore attention to issues of growing urgency, includingair pollution, traffic congestion, safety, affordability,and trade. This could entail a trade-off betweena portion of the traditional highway business andnewer, more complex challenges.2. Prepare a Bank Group transport strategy with a sixfoldemphasis:(i) Paying greater attention to air and water pollutionand realizing environmental gains(ii) Achieving greater synergies across relevant sectors—buildingon the merging of the Bank’s Environmentallyand Socially Sustainable Development andInfrastructure Networks(iii) Enhancing knowledge sharing and analytical andadvisory services and their contribution to countrystrategies(iv) Continuing to support private sector participationthrough close coordination among the Bank, the InternationalFinance Corporation (IFC), and the MultilateralInvestment Guarantee Agency (MIGA)(v) Increasing attention to governance and corruptionissues(vi) Redeploying staff and budget resources accordingly.Management responseManagement agrees with the recommendation and its implication, which is at the coreof the transport strategy update now being finalized under the title Safe, Clean, andAffordable Transport for Development. This implies specific enhancements to sectoractivities to promote increased road safety and appropriate policy response to linkagesamong transport, energy efficiency, vehicle emissions, short-term public health impacts,and long-term greenhouse gas outcomes, and to overcome physical or service qualitytransport bottlenecks to regional and international trade in goods and services. However,this evolution, already under way, should not be at the expense of support forhigh-return and in-demand highway operations.Management agrees with the recommendation and will address it as follows:(i) The Transport Strategy Update will spell out the necessity to widen the applicationof key environmental issues and mainstream them into the lending portfolio.(ii) The sector will continue to strengthen coordination between transport professionalsand other Bank Group units in all relevant areas such as urban planning, ruraldevelopment, energy, gender, health and education, private sector participation, trade,and transport facilitation.(iii) The Transport Sector Board will encourage concentration of resources to obtain maximumimpact by a series of Transport Flagship Reports designed to provide policy andpractical guidance while maintaining operational application for development effectiveness.Also, to provide better support to countries preparing poverty-reductionstrategies and Bank country teams preparing Country Assistance Strategies basedon those strategies, the Transport Sector Board will lead the preparation of specificguidelines on how to address transport sector issues in public expenditure reviews.And to help scale up urban transport operations, the Transport Sector Board will leadthe production of operational guidelines on how to implement the vision spelled outin Cities on the Move.(iv) The update to the sector strategy will reconfirm the continuation of the ongoingcollaboration both within Bank teams and with IFC and MIGA units to make the mostof each entity’s advantage in mobilizing the appropriate private sector skills andresources in support of sustainable transport development operations.(v) Special attention will be given to working across infrastructure sectors to reducecorruption risk in Bank-financed projects, while supporting wider country initiatives toreduce corruption in the transport sector as a whole, and to producing sector-basedoperational guidelines to enhance project resilience to corruption.(vi) The Environmentally and Socially Sustainable Development Network will lead astrategic staffing and budget review for transport to make the most of network integration,taking into account the skills mix needed under the updated strategy andreflecting operational demand.(Table continues on next page)xxi

A DECADE OF ACTION IN TRANSPORTManagement Action Record(continued)IEG recommendation3. Build up the sector’s monitoring and evaluationefforts and align them with the new strategy, includingthrough:Management responseManagement agrees with this recommendation, as progress and accountability in transportand development require more effort to improve measurement of the performanceof transport systems, of the results of Bank-financed transport projects, and of the impactof alternative transport policies.Specifically:(i) The development over the next year of relevantintermediate indicators applicable to the broad rangeof projects(ii) The launch of an enhanced program of rigorousimpact evaluations for selected programs(iii) A comprehensive self-evaluation of the experiencewith Sectorwide Approaches (SWAps) within threeyears(iv) An independent overview of the Sub-SaharanAfrica Transport Policy (SSATP) program within twoyears.(i) The transport anchor is leading the development of transport results indicators, bothat the sector and project level; these will be implemented across projects and subsectors.(ii) As part of the Development Impact Evaluation Initiative, in collaboration with theDevelopment Economics Department, the transport sector will pilot impact evaluationsof selected rural transport operations.(iii) Management agrees and will plan accordingly, because increasing Bank transportlending made through programmatic approaches is one of the proposed priorities ofthe updated transport strategy.(iv) Management agrees and will plan accordingly in coordination with SSATP donorsand partners.Management will consider all of its agreed actions complete after the discussion byExecutive Directors of the transport strategy update, the launching of the pilot ruraltransport impact evaluations, and the self-evaluation of SWAps. The SSATP programis a partnership, so management’s commitment is to encourage and support partnersto undertake the recommended action. Management will report on implementationresults in the context of the sectoral component of the planned regular operational resultsreports.xxii

Chairperson’s Summary:Committee on DevelopmentEffectiveness (CODE)On February 14, 2007, the Committee on Development Effectiveness(CODE) met to discuss A Decade of Action in Transport: An Evaluationof World Bank Assistance to the Transport Sector, 1995–2005,prepared by the Independent Evaluation Group (IEG), and the draft managementresponse. A statement of the external advisory panel on the IEG reportwas circulated as a background document.Summary of the Evaluation ReportTransport projects have accounted for more than$30 billion of the International Bank for Reconstructionand Development/International DevelopmentAssociation’s commitments during thepast 10 years, with a further $1.9 billion commitmentby the International Finance Corporation(IFC). IEG provided the following recommendationsto Bank management:• Expand focus of operations beyond intercityhighways and rural roads.• Prepare a Bank Group transport strategy witha sixfold emphasis: environmental impact, synergiesacross sectors, knowledge sharing andanalysis, private sector role, governance, andredeploying staff and budget resources.• Build up the sector’s monitoring and evaluationefforts.Summary of Draft Management ResponseManagement agreed with the thrust of IEG recommendations.Management also felt that the reviewmight have gone even further in some areassuch as the interface with other sectors and thematicareas, such as gender, social inclusion, andhealth; fiscal space; greater differentiation acrossreview periods; and client perspective. Many ofthese issues are at the core of the update of thetransport strategy that is being finalized underthe title Safe, Clean, and Affordable Transport forDevelopment.Overall Conclusions. The Committee memberscommended IEG for a “very useful, timely,and comprehensive evaluation” [words taken fromthe Executive Directors’ written statements]. TheCommittee also commended the transport sectorstaff for their hard work, and also for the highxxiii

A DECADE OF ACTION IN TRANSPORTefficacy and developmental relevance of theirefforts. Members appreciated staff commentson Regional experience in Latin American andthe Caribbean and Africa. There was broad endorsementof the key findings of the review andmanagement’s proposed actions, including: (1)expanding work beyond traditional intercity roadconstruction to address emerging needs; (2) reiteratingthe need for having an integrated BankGroup (including IFC and the Multilateral InvestmentGuarantee Agency [MIGA]) transport strategywith a sixfold emphasis; and (3) reaffirmingstronger monitoring and evaluation. Several speakersalso reiterated the importance of listening toclients and taking into account regional approaches.The private sector role elicited a wide range ofviews. Some speakers would have liked the reviewto have covered in more detail the effect of themerger of the infrastructure and private sector developmentsectors in the mid-1990s that had importantimplications for the present.Next Steps. The IEG findings and CODE discussionare intended to feed into the ongoingrevision of the Bank’s transport strategy under thetitle Safe, Clean, and Affordable Transport forDevelopment. Management has proposed todiscuss the directions of the transport sectorstrategy in the upcoming Sector Strategy ImplementationUpdate.The following main issues were raised during themeeting.Report Issues. The Committee welcomed thetimely IEG review of the experience in the transportsector in terms of helping the preparation ofthe sector strategy update and also in light of theimminent discussion on World Bank Group strategyand resources. Given the satisfactory performanceof transport projects in the last decade,a member wondered why more investments hadnot been made in this sector. He also felt that theIEG report should have focused on lessonslearned from the merger of the infrastructureand private sector development sectors, particularlythe impact on the infrastructure portfolio.Focus of Operations. Members endorsed IEG’srecommendation to expand the focus of operationsbeyond intercity road construction and togive more attention to “emerging needs,” includingincreased sophistication of demands in developingcountries. There is a need to broaden thecore business into different types of transport,including city subway systems, light railways, andairports to respond to the specific needs of mainlymiddle-income countries. However, members alsonoted the continued need for traditional highwaysand road infrastructure, especially in lowincomecountries in Africa. Speakers expressed adiversity of views on whether the primary focus ofBank work should be on the economic rate of returnof projects, the cost-effectiveness of the transportmode, or the social dimension of transportprojects (for example, the impact on health or gender).Management noted that economicallymeaningful transport projects can also providesocial benefits and opportunities to disadvantagedsegments of the population. IEG also emphasizedthe importance of road safety, becausethe cost of road accidents is a heavy burden ondeveloping countries.Country Focus. The importance of listening tothe clients was noted, while considering that solutionssuitable for middle-income countries withexisting transport infrastructure may not be as applicableto low-income countries with weaker capacitiesand regulatory frameworks. A memberemphasized the need for an integrated countryapproach before adopting different transportmodes; transport is a national development issuewith multisectoral dimensions. In this regard,members stressed the importance of being consistentwith varied Regional and country needs.Management said that countries’ demands willbe supported depending on the level of transportdevelopment and specific needs at the local andRegional level. However, the same policy principlesand ways of assessing economic and socialviability will be followed.Proposed StrategyEven though the key elements of the currenttransport strategy (sustainability, private sectordevelopment, and urban transport) remain relevant,members generally endorsed IEG’s BankGroup transport strategy proposal for a sixfold emphasisand made the following specific comments:xxiv

CHAIRPERSON’S SUMMARY: COMMITTEE ON DEVELOPMENT EFECTIVENESS (CODE)• Environmental impact—The current transportprojects are more complex because ofenvironmental impact, including pollution andenergy, but their costs are higher.• Synergies across sectors—Cross-cutting issuessuch as traffic congestion, road safety, affordability,and urban and rural development shouldbe taken into account in project design.• Knowledge sharing and analysis—The Bankshould promote more analytical work, research,and dissemination and document lessonslearned from projects. The public sector has arole to play in knowledge sharing, including onsafety and environmental and strategic integrationof transport modes.• Governance—The Bank needs to assist itsclients in strengthening institutional capacity, includingthe use of country systems in transportprojects. In this vein, one member stressed theimportance of national systems’ budgeting formaintenance of transport infrastructure. Fiscalspace and political economy should be consideredin the design of the transport system (forexample, roads, railways, and subways).• Role of private sector—There is considerablescope for increased private sector involvementin the transport sector. However, the public sectorcan play different roles, from investor oftransportation infrastructure to regulator. Also,consortia or public-private partnerships canplay different roles in approaching social utility,externalities, or market failure. Managementclarified that transport infrastructureinvestment is predominantly supported by thepublic sector while transport services are generallyprovided by the private sector.• Redeploying staff and budget resources—Appropriateresources, staff skills, and incentivesshould be in place to address the challenges ofimplementing the new sector strategy. Suggestionswere made on implementation issuessuch as the need for assessing available andneeded resources, hiring of local consultantsor academics, and deepening the decentralizationof transport sector work.World Bank Group Strategy. Speakers stressedthe need for having an integrated Bank Groupwidetransport sector strategy capitalizing fully onthe synergies and competencies of different unitswithin the Bank, IFC, and MIGA. They felt the Bankshould play a lead role assisting countries in theimprovement of the transport sector, including advisoryservices and technical assistance, while assuringcountry ownership. The potential conflictof interests for the Bank Group, which offers adviceto the authorities on transportation planning,but at the same time is also an investor intransport infrastructure, was raised. Membersalso stressed the importance of greater coordinationwith international partners in the design,cofinancing, and supervision of projects. Managementnoted that the Bank has a role to playin the improvement of project design, includingissues such as safety or the environment.Management has also considered partnershipswith other international financial institutionsand donors.Monitoring and Evaluation Efforts. Membersconcurred with IEG’s recommendation tostrengthen monitoring and evaluation, includingaddressing more decisively poverty indicators,for example, access and affordability; and the developmentof more indicators, for example, toassess the development impact of improved transportinfrastructure and services and a comprehensiveself-evaluation of programmatic lendingapproaches. This will also entail building monitoringand evaluation capacity in the Bank and itsclients.Challenges AheadSome members commented on the trade-offs forrefocusing the Bank’s assistance toward the newchallenges identified by IEG. The importance ofconsidering the impact of climate change andnatural disasters on transport infrastructure wasalso noted. Management indicated that the newstrategy will address trade-offs of infrastructurewith social perspective, private sector engagement,environmentally sustainable projects, andurban development, which are not separate issuesof the overall transport policy.Jiayi Zou, Chairpersonxxv

Statement of the ExternalAdvisory PanelThe members of the external advisory panel appreciate the effort of theIndependent Evaluation Group in preparing this report. Not surprisingly,the report emphasizes that the transport sector is one of the mostimportant sectors serving national and international development, accountingfor 5 percent to 6 percent of global gross domestic product (GDP). No singleUnited Nations entity deals solely with transport because of its supportiverole to all sectors, so the Bank has assumed a crucial responsibility toward itsmember states and has largely met their expectations.Over the past decade, well over 15 percent ofBank lending has been allocated to 642 transportprojects or projects, with transport elements exceeding$30 billion in total lending. Bank commitmentsfor transport and transport-relatedprojects rank third in importance after the law, justice,and public administration sector and the socialsector.The report provides a wealth of concise global information,well-chosen examples, and useful casestudies, thereby providing firsthand backgroundfor understanding the Bank’s operations and theeffort and views of its transport sector staff. Thefindings are transparently provided, conclusions arewell documented, and the recommendations aresoundly formulated. The report, therefore, providesa solid foundation for Bank management todevelop and adopt new strategies and measuresaimed at achieving present and future global objectives.It is also of a great value to beneficiary anddonor countries and other stakeholders.It is regrettable that this is the first evaluation ofthe transport sector operations since the Bankevaluation group was founded in 1973. It wouldbe appropriate to introduce an intermediate, lessextensive5-year follow-up evaluation that can,together with the individual evaluations of projects,complement the decade-based studies enablingmonitoring of Bank operational trends andoutcomes versus the Bank’s medium- and longtermstrategies.The evaluation adopts a well-structured methodologyof successive, interactive, and carefully designedand implemented steps. These cover aliterature review, an analysis of the previouslymentioned 642 projects, solicitation of specialthematic studies on road maintenance and roadxxvii

A DECADE OF ACTION IN TRANSPORTfunds, a global overview of public-private partnerships(PPPs) in transport, a review of a specialtransport policy programme in Africa, and informationextracted from existing impact studies inBrazil and Morocco and a multilateral study inGhana. In addition, interviews were conductedwith Bank transport staff and with stakeholders(government officials, transport service providers,and interested parties), and detailed country casestudies were undertaken in Brazil, India, andTanzania. Therefore, an admirable geographicalbalance between developing countries and continentshas been achieved. Furthermore, thedeliberations and viewpoints of the external advisorypanel that arose during the progress ofthe evaluation have been duly reflected in thereport.The report concludes with recommendations derivedlogically from the findings and the results ofthe analysis. The panel supports these recommendations.In addition, however, we would liketo emphasize important issues of particular concern.Some of these are already dealt with in thereport; others are complementary.• The failure of some projects to fulfill theirobjectives and to achieve their institutional andfinancial targets during the planned time periodis discouraging and should be avoided. Realisticand attainable project objectives are necessary,regardless of country or Bank aspirations.• The report shows that monitoring and evaluationare rated “least satisfactory” among thesubobjectives, in the analyses of the outcomesof the objectives. The panel therefore believesthat it is of vital importance for the Bank and thetransport sector staff to adopt appropriate strategiesand to investigate better methods, indicators,and tools (for example, log-frames andtarget performance indicators) that are suitablefor undertaking “results-based” monitoringand evaluation of projects. These should bedefined during the project preparation phase.• Bank technical assistance is often unsustainablein recipient countries; therefore, the relatedstrategies need to be reassessed and improved.Country-driven ownership is important to attainand is preferable to the imposition and enforcementof “pre-agreement conditions.”• In some cases hired foreign consultants andBank staff are unaware of country conditions,national obligations, and needs. Consequently,Bank missions can recommend actions or projectsthat do not respond to local concerns,priorities, or immediate requirements. If decisionmakers of the recipient country are unawareof such shortcomings, poorly conceivedprojects can get started and move forward,wasting time and resources. Bank managementshould carefully consider the selection ofmission team members. Local consultants andacademic transport specialists from the recipientcountry should be professionally contracted,not simply interviewed, as is thecurrent practice.• Similarly, Bank training sometimes neglectslocal context, needs, capabilities, and realities.It should fully exploit local transport educationexpertise in the recipient country whereveravailable. If that is not possible, expertise fromneighboring countries or those experiencingsimilar conditions should be utilized. Thus,the provision of realistic initiation, planning, design,and implementation of training wouldbe ensured.• The panel strongly supports the reported findingson encouraging the Bank to go for riskiermulti-institutional and/or multisectoral projectsin developing countries, including road safety,urban transport, and rural transport projects:(a) More than 3,000 deaths result daily fromroad accidents. Low- and middle-incomecountries account for 85 percent of suchdeaths and 90 percent of injuries (1 percentto 2 percent of GDP), and Bank projectswith road safety components showmixed results to date, with outcomes oftenunsustainable. Hence, we call for a morethorough assessment of these projects,analyzing shortcomings, investigating thebest methodology, and adopting a newxxviii

STATEMENT OF THE EXTERNAL ADVISORY PANELstrategy, including the more cohesive multidisciplinaryapproach mentioned in thereport.(b) Given that the number of cities with apopulation of more than 1 million in developingcountries is expected to increasefrom 268 to 358 between 2000 and 2015,we encourage more urban transport projectswith a strong emphasis on the alleviationof the causes of the transportproblem rather than just combating thesymptoms, as has been the case in manyprevious projects. City governance underconditions of urban sprawl might be addressedto improve institutions and reformregulations; loans can be used toleverage these changes.(c) Many citizens of developing countries arerural poor, often with low or almost no accessto transport; transport of agriculturalproducts to markets is extremely difficult.Poverty alleviation, a key objective of thedevelopment agenda, can only be achievedif rural poverty is reduced, transport beingan important catalyst. We therefore backmore emphasis on sustainable rural transportprojects.• With the reported massive lending for intercityhighways infrastructure in the past decade (73percent of Bank commitments to transport)and in appreciation of the report’s clear recommendationto shift the focus of transport operationstoward environmental and safetyconcerns, the panel supports more lending inthe next decade for projects that tackle globalwarming and rising energy costs (for example,land use/transport planning, restraining caruse and reducing distance traveled, encouragingmodal shifts to environmentally friendlymodes, and so forth). This is in addition to includingenvironmental concern in all projects;capabilities and obligations of developing countriesshould not be ignored.• In several places the report refers to nonmotorizedtransport (NMT), pointing out its importanceto the poor in urban and rural areasof developing countries and its considerableshare of total daily movements. It also emphasizesthe inferior conditions of NMT facilitiesin many countries and the few Bank-relatedprojects. We appreciate this finding and urgethat the Bank fund more NMT projects, pointingout the problem of lack of sponsors to finance“outside the government budget”because of the lack of or very low revenuegenerationnature of such projects. However,pedestrians and cyclists are also taxpayers. TheBank and its clients should identify new supportiveinstruments and develop more sustainableNMT strategies, capitalizing on itsenvironmentally friendly nature and its soundeconomic and health effects on individualsand families, compared with the motorizedmodes. Support of concerned internationalagencies (for example, Global EnvironmentFacility, the United Nations Environment Programme,and so forth) should be sought.• We clearly back the report’s strategic call for adequatestaffing of the transport sector; thepanel certainly supports including more memberswith long experience as well as youngprofessionals. This ensures a smooth transitionof experience, sustainable quality (innovation)and quantity of projects, and knowledgedissemination to clients’ staff during implementationof projects; lack of the latter is ashortcoming of inadequate staffing indicated inthe transport sector staff interviews.• It is disappointing for the panel and the worldtransport community, particularly but not limitedto researchers, to see few publicationsand research done on Bank project outcomes,data, and knowledge-base. Compared with thehuge extent of Bank lending and the numberof projects in the past decade, the share oftransport sector research papers, reports, andpublications is just 4.3 percent of the Banktotal. It is self-evident that the world will expectmuch more in the coming decade.• A country-specific approach to projects is important,because not all conditions prevail andxxix

A DECADE OF ACTION IN TRANSPORTnot all rules are applicable in all countries. Thisis vital for success and for reaching practical results.For example, metros should only be applicablefor megacities, all-weather rural roadsonly in countries with variable climates, and installationof certain types of information technologyservices linked to country technologicalcapabilities only to ensure sustainability (maintenanceand/or upgrade). History; size; prevailingcircumstances and problems; past andexpected future development stages; economic,social, and political obligations; the level and natureof bureaucracy; current applied regulations;and institutional performance and thenational culture of the public administration alldictate this approach.• We strongly support the Bank’s approach to encouragingprivate participation and removingobstacles to achieve successful PPPs in thetransport sector in developing countries andtransition economies. This is particularly importantfor roads and road maintenance, ports,and airports. It can also be applied in some elementsof railways (train operations, track, andmaintenance) and particularly encouraged in inlandnavigation, urban public transport, andsome traffic management projects. The lessonsof the success of road funds and previous globalexperience with PPPs in transport are excellentlydiscussed and analyzed in the report andvery much appreciated by the panel. We urgemember countries and Bank staff to benefitfrom the useful lessons presented, taking thelocal context of each country into account withemphases on the required prerequisites forthe success of PPPs.• As reported, when road infrastructure is poorlymaintained, the public pays heavily throughhigher vehicle-operating costs, accidents, lossof travel time, and reduced accessibility tojobs, among other results. However, decisionmakers in developing countries do not necessarilythink in terms of long-term economicbenefits. They are rather often engaged inemergency financing, and the governmentsfrequently lack liquidity for other urgent services.The Bank certainly realizes this fact, andwe encourage new endeavors to promote participationof the private sector in maintainingroads and other transport assets. This similarlyapplies to the operation and maintenanceof urban public transport.• The fight against corruption is also very important.We admire the Bank’s continuous effortand invite even greater accomplishmentsin this respect in the future.• The panel supports sustaining previous attemptsto achieve a balanced allocation ofBank lending by mode, country, and Region,thereby serving the balanced developmentcause.• The panel acknowledges the Bank’s effort tocooperate with other international fundingagencies, as reported, and calls for makingsuch connections closer and more pragmaticand widening them, moreover, to include regionalagencies and transport professionalinstitutions.• Finally, we add to the existing report recommendationsdirected to Bank management afurther two-tier recommendation directed tobeneficiary countries—they should benefitfrom the report contents and findings and alsoupgrade the know-how and communicationskills of their executive and technical staff forbetter utilization of the capabilities and knowledgeof the Bank’s missions. This will encouragenegotiating sound and successful projectswith attainable objectives and sustainable outcomes.Local universities’ transport academicsand the World Bank Institute have a key jointrole to play.We acknowledge that we have been associatedwith this valuable study and appreciate learningmuch from our participation.xxx

STATEMENT OF THE EXTERNAL ADVISORY PANELMembers of the External Advisory PanelViorica Beldean, Honorary President of theBoard of METRUL Bucharest and President ofthe Romanian Committee of CODATU (Cooperationfor Urban Mobility in the Developing World),RomaniaAli S. Huzayyin, Professor of Transport andTraffic Planning and Engineering, Faculty ofEngineering, Cairo University, and Director ofthe Development Research & TechnologicalPlanning Centre, Cairo University, Egypt, andFirst VP of CODATUPierre Laconte, Honorary Secretary General,International Association of Public Transport,Belgium, and President, International Societyof City and Regional PlannersHenning Lauridsen, Chief Research Engineer,Institute of Transport Economics, Norwayxxxi

Chapter 1: Evaluation Highlights• Transport is an enabling sector for development and accounts fornearly one-fifth of World Bank Group commitments.• The products and markets of the transport industry are complex anddiverse.• There is a strong link between transport improvements and povertyreduction.• Transport services are nonstorable and highly time and route specific.

1Study Rationale, Objectives,and OrganizationTransport is crucial for economic growth and trade, which are highly dependenton the conveyance of both people and goods. Virtually no productioncan take place unless inputs such as raw materials, labor, andfuel can be moved from different locations; neither can manufactured productsbe delivered to consumers, nor a wide variety of services carried out.Transport is estimated to make a contribution ofbetween 5 percent and 6 percent of gross domesticproduct (GDP). 1 It is therefore not surprisingthat transport projects have accountedfor as much as $30 billion of the InternationalBank for Reconstruction and Development’s/International Development Association’s (IBRD/IDA)commitments during the past 10 years, witha further $1.9 billion committed by the InternationalFinance Corporation (IFC). 2Role and Nature of TransportReductions in transport costs enable specializationand economies of scale; they can also stimulatetrade and production and help to extend markets.Similarly, improvements in urban transport havebeen shown to enhance urban labor market efficiencyand enable changes in the scale and formof urban agglomerations. All these linkages havebeen confirmed by extensive empirical evidenceand show a positive correlation between transportinvestment and economic outputs. 3But transport is entering a different paradigm.The solutions that were successful in the past mayno longer be so applicablein the future as the worldbecomes more complexwith sometimes competingforces. Those forcescome from rapidly expandingand urbanizing populations,trade globalization,The Bank Groupcommitted nearly$32 billion for transportprojects during1996–2006.new technologies, and more integrated approachesto resolving intricate, multisector problems.The products and markets of the transport industryare complex and diverse, and each transportmode has distinctive characteristics. Themain modes are road transport, maritime and inlandwaterway transport, aviation, mass transitsystems, railways, and a varietyof informal means.Most modes provide forboth freight and passengerconveyance. A basic distinctionis drawn betweentransport services rendered directly to the usersand transport infrastructure used by transport serviceproviders. Many transport services found inTransport services andinfrastructure arecomplex and diverse.3

A DECADE OF ACTION IN TRANSPORTboth industrial and developing countries are privatelyowned and operated, but privately ownedinfrastructure is significantly less common. Theroles of and interrelationships between the publicand private sectors in transport and the sustainabilityof transport systems and infrastructureare pivotal to successful development.Transport requirements also vary with the densityof population (urban and rural), the distributionof wealth among a country’s inhabitants, and theneed to facilitate more efficient movements acrossinternational boundaries. In the city and the ruralvillage alike, the basic problems are accessibilityand affordability. In both cases the poor are oftenneglected because they cannot pay for services,so governments with scarce resources have tomake difficult choices.Transport provides a highlevel of indirect supportto poverty reduction.The effects of transporton poverty reduction arenot well understood, butgrowing evidence linkstransport investment tothe improved well-being of the poor. 4 Research inrural Bangladesh, China, India, and Indonesia, forexample, has shown that the greatest returns foragricultural productivity and poverty reductionoften result from investments in roads. In Morocco,socioeconomic surveys have demonstratedthat the provision of all-weather roads has improvedthe quality of education, because improvedaccess makes it possible to recruit and retain qualifiedteachers. Transport provides poor peoplewith the ability to participate better in developmentopportunities. Improved rural roads, in particular,enhance access to markets, jobs, schools, social services,and health facilities. Currently some 1.2 billionof the world’s poor lack access to anall-weather road.Some facets of transportdistinguish it from theother infrastructuresectors.Improvements in accessibilityfor the urban poorhave similarly been shownto have a marked effecton their access to job opportunitiesand on thequality of life of low-income city residents. It is predictedthat in a few years half of the developingworld’s population will live in cities that as yet donot have transport systems that can cope withthe expected influx of people.Many transport sector issues are shared with theother economic infrastructure sectors, such asenergy and water. But transport, and especiallytransport infrastructure, has a number of distinguishingfeatures that bear directly on the relativeroles of government and the private sector intheir development and management. Notable differencesinclude the following:• At both national and local levels, transportinfrastructure interrelates closely with landuse and has a large impact on the physicalstructuring of the overall economy and itsinclusiveness. These are areas of preeminentgovernment responsibility that usually requireproactive planning, in addition to appropriatepricing and taxation policies.• Transport activity, especially in roads, has significantnegative external effects (particularlycongestion, air and noise pollution, and accidents),which have proved much more difficultto reflect directly in pricing structures thanexternalities generated in other sectors. Thismeans that government interventions are oftenneeded to improve resource allocation.• Transport infrastructures tend to have particularlylong lives if efficiently maintained, sothe economic priority of investing in them dependsto a great extent on uncertain predictionsof demand in the far future, and capitalcharges often account for a higher share ofthe overall costs of service delivery than for theother infrastructure sectors. This means thatgovernment absorption of some risks may benecessary to realize investments that are conduciveto a desirable physical structuring of thecountry’s territory and economy.• Transport services are also nonstorable andare highly time and route specific. For these reasons,the difficulties of achieving economicallyefficient pricing structures require that costssometimes be recovered from within the sectoronly by use of cross-subsidies and thatsome services may need to be subsidized fromoutside the sector. The great diversity of trans-4

STUDY RATIONALE, OBJECTIVES, AND ORGANIZATIONport services, and the need for them nonethelessto interlink in manners specific to time andplace, also means that special attention oftenhas to be given to coordination among enterprisesand agencies operating in the differentmodes.Evaluation Rationale, Objectives,and OrganizationThis evaluation responds to interest from theBank’s Board of Executive Directors regardingboth the impact of the private sector on infrastructureand the role of infrastructure in supportof the Millennium Development Goals (MDGs).It complements infrastructure reviews alreadycompleted by the Independent Evaluation Group(IEG) in the water, electric power, urban, andtelecommunication sectors.The pillars of the current Bank transport strategydefine the four main areas that are the primaryfocus for this evaluation:• The extent to which client countries have developedcompetitive markets in transport andrethought the respective roles of the privateand public sectors in transport supply.• The extent to which transport projects andstrategies in member countries are sustainable.This is meant not just in terms of thepreservation of physical assets and the abilityto address environmental matters, but thewhole supporting edifice of an appropriateregulatory and policy framework, sound governance,and an adequate institutional capacity,including an appropriate organizationalstructure and sufficiently trained personnel.• The degree to which transport assistance hasbeen able to contribute to poverty reductionin both rural and urban contexts.• Fourth, based on lessons learned and takinginto account the availability and adequacy ofresources in the sector, an assessment ofthe readiness of the Bank transport network torespond to the emerging global challenges ithas identified.The review has eight chapters. Chapter 2 discussesglobal trends, Bank strategy, and sectoroutcomes. Chapter 3 analyzesthe transport portfolio,including performance bymode and by Region. It concludeswith a discussion ofRegional donor cooperation and an assessmentof nonlending assistance. Chapter 4 is devoted tothe Bank’s role in promoting private sector participationin transport, and chapter 5 focuses onsustainability, institutional development, and environmentalprotection. Chapter 6 reviews thecontribution of transport to poverty reduction,and chapter 7 examines process, resource, andperformance issues pertaining to the transportnetwork. The final chapter presents the mainfindings, lessons, and challenges this sector islikely to face in the future, as well as the study’srecommendations.Evaluation MethodThis study is the first major and comprehensiveIEG evaluation of the transport sector; in the pastonly subsectors such as urban transport, railways,and ports have been reviewed. The period coveredby the review is July 1995 toTransport services arenot storable and aretime and route specific.This study is the firstcomprehensive IEGreview of the transportsector.June 2006. During this timethere were 642 projects withtransport components in theportfolio. Of these, 335 haveclosed and 284 5 have beenevaluated by IEG. This extensivecustomized database covering all transportmodes provided the foundation for an analysis ofhow the projects performed, their outcomes, andwhat lessons have been learned.A number of instruments were used to conductthis review (further details are in appendix A):• Literature review: Covering published documentson transport issues relating to developingcountries, complemented by a review ofBank nonlending transport activities• Portfolio review: 642 projects examined• Analysis of existing evaluations: 57 CountryAssistance Evaluations (CAEs); 254 reviews ofImplementation Completion Reports (ICRs);74 Project Performance Assessment Reports5

A DECADE OF ACTION IN TRANSPORT(PPARs) covering 41 countries, of which 20were specifically selected during the study designfor inclusion to ensure a balanced geographicand modal coverage• Special thematic studies: Road maintenanceand road funds, a global overview of publicprivatesector balance in transport, and a reviewof a special transport program in Africa. Informationwas also extracted from existing impactstudies in Brazil and Morocco and a multilateralstudy in Ghana.• Stakeholder interviews and Bank staff interviews:One-third of the Bank’s transport networkstaff—representative of both headquartersand country offices—was interviewed. Stakeholdersinterviewed included government officials,providers of transport services, andinterested parties, such as consultants, usergroups, and academics.• Country case studies: In-depth analysis oftransport activities and stakeholder opinionsin Brazil, India, and Tanzania.6

Chapter 2: Evaluation Highlights• Without efficient transport, the productive sectors cannot fulfill theirpotential, so many of the MDGs will not be achieved.• Globalization has intensified the need for efficient transport.• Private sector engagement in transport increased in the early 1990s,but the public sector remained dominant.• Increased attention by the Bank to the social sectors drew lendingaway from transport for a while.• Since 2002 there has been a strong swing back to transport lendingas part of the Bank’s renewed emphasis on infrastructure.

2Global Trends, Bank Strategy,and Sector OutcomesGlobalization, and especially international trade liberalization, hasgreatly stimulated investment in the transport sector. East Asianeconomies in particular have been growing at over 7 percent annuallyfor the past 15 years. Accompanying this growth has been a commensurateincrease in the demand for transport infrastructure and services.Global Transport: Trends and IssuesGlobal competition has intensified the need forefficiency in transport and logistics systems inthe delivery chain, from the point of manufactureto delivery to the customer. The challenge fortransport providers is to meet future capacityneeds and further develop technology to achievegreater efficiency and lower costs. As oil priceshave risen, transport has increasingly becomethe biggest cost factor in the final amount the consumerspay.International CoordinationBecause transport is supportive rather than directlyproductive, it is inevitably integrated into thestrategic frameworks of other sectors. This is why,unlike in many other sectors, there is no singleUnited Nations (UN) entity responsible for promotingand coordinating transport issues, althoughthere are some valuable internationalinitiatives that have established cross-cutting globalstrategies on specific transport-related subjects.Good pioneering efforts include studies by theUnited Nations Conference on Trade and Developmenton internationaltransport problems facinglandlocked countries,the report on preventionof road traffic injuries bythe World Health Organization (WHO), the GlobalFacilitation Partnership for Transportation andTrade, and the International Civil Aviation Organization(ICAO) on air safety and security. 1Transport features indirectly in many other strategicareas, including air pollution and HIV/AIDS prevention.Predictably, it isan important componentin both rural and urbandevelopment programs.Efficient transport isvital for tradeglobalization.Transport is anenabling element forachieving the MDGs.Poverty ReductionThe UN Millennium Declaration, the cornerstoneof the world’s current development agenda, doesnot specifically feature transport in its 2015MDGs—goals that include freedom from hunger,universal primary education, gender equality, reducedchild mortality, improved maternal health,9

A DECADE OF ACTION IN TRANSPORTcontrol of disease, and environmental sustainability.Transport does, however, provide accessibilityboth for rural villagers and urban slumdwellers and is a vital enabling element of achievingmany of the MDGs.The absence of adequate transport can ensure thatthe poorest people remain in poverty. This is a criticalissue when half the world’s population liveson less than two dollars a day and a fifth surviveson a dollar a day or less.Transport EfficiencyAccording to studies undertaken by the UN Conferenceon Trade and Development (USAID 2001),11.5 percent of the total value of imports to Africais related to transport costs. The equivalent percentagefor Asia is 7.2 percent and North America,6.7 percent. On the export side, for manycountries in Sub-Saharan Africa, at least 20 percentof the export costs are directly attributable totransport. For landlocked countries such as Malawi,the figure can be as high as 55 percent.This very seriously weakens the terms of trade forsuch countries. Transport inefficiencies can alsoexacerbate the impact of distance. For instance,it can cost three times more and take five timeslonger to move a container500 kilometers (km) inlandin China than it does in theUnited States. Economies ofscale are becoming increasinglyimportant and have resulted in the establishmentof huge transport hubs, where highproductivity can reduce costs dramatically.Privately run transportservices are widespreadand usually successful.Private Sector InvolvementPrivately run transport services are widespread andusually successful. Optimism was high in the early1990s that the private sector could also assumea much larger part of the responsibility for transportinfrastructure. But market expectations, especiallyin developing countries, turned out to befar too ambitious, and after a dramatic decline inthe late 1990s recovery only became evident in2005. Nevertheless, despite a few highly publicizedfailures, successful private concessions have beenestablished in all modes of transport.In developing countries transport concessionsare most common in middle-income countries,such as Argentina, Brazil, China, Mexico, SouthAfrica, and Turkey. In these countries the volumesof traffic, particularly for toll roads, are more attractiveand there is sufficient public sector capacityto engage with potential private sector concessionaires.Despite this progress, for the foreseeablefuture, the public sector will undoubtedlyremain the largest owner and operator of basictransport infrastructure, partly because the transportsector—especially roads—manifests publicgood characteristics and partly because of growingconcerns about safety and security issues.Infrastructure SustainabilityA lack of capacity to preserve infrastructure assetsafter construction is a problem confined mostly todeveloping countries. Inadequate maintenancebudgets in the face of widespread poverty, as wellas lack of skills and political instability, have all contributedto concerns about the adequacy of assetpreservation, especially in the more fragile countries.Positive results have been achieved throughintroducing a degree of management autonomy,better assurance of funding, greater public participationand more involvement by the private sector.Transport Sector GrowthIn the transport sector, the motor industry hasreached maturity in the markets of North America,Europe, and Japan. Globally, however, it ispoised for huge expansion with the motorizationof China and India. Within a few years China willreplace Japan as the second-largest national marketafter the United States, and over the next20 years more cars may be built than in the entire110-year history of the industry (Economist 2005).Similar expansion is expected in the aviation andmaritime industries; only in railways is growthlikely to be slower. Especially in the developingworld, urban growth is surging, and the numberof cities with more than 1 million inhabitants is ontrack to increase from 268 in 2000 to 358 by 2015(UN Habitat 2001). Although some recent advancesin technology, such as telecommuting;electronic pricing; and improved vehicle, fuel,and engine efficiency may to some extent impinge10

GLOBAL TRENDS, BANK STRATEGY, AND SECTOR OUTCOMESon likely future scenarios for the industrial countries,for most of the world’s inhabitants, such developmentsmay have only peripheral relevance inthe short to medium term.Environmental IssuesWe now live in a global community. Not onlypoverty, but air pollution, transmission of diseases(including HIV/AIDS), and safety and securityall have important transport aspects. Reducing thenegative impacts of transport activities needs anintegrated international approach involving multiplesectors. If the transport challenges for thenext decade are to be met, then environmentalissues and sustainable development must be moreprominent in the design of future transport projects.For cities in developing countries, someexperts (Gwilliam 2005) are calling for more imaginativelydesigned public transport projects thatwill be more creative in the structuring of passengerfares, better complement land use policiesthat assist the poor, and combat traffic congestionthrough the supply of cost-effective solutionssuch as bus rapid transit systems, parking strategies,and road pricing schemes.Foundations and Relevance of the Bank’sCurrent Transport StrategyThe existing Bank transport strategy has evolvedfrom the accumulation of considerable experienceover a long period. 2 The only formal sector strategypaper produced by the Bank on transport,however, is Sustainable Transport: Sector Reviewand Lessons of Experience (World Bank 1996, andas updated in Sector Strategy Implementation Updates[SSIUs]). Three widely distributed reports,however, have played a role in shaping the currentBank strategy: the World Development Report: Infrastructurefor Development (World Bank 1994b),Sustainable Transport: Priorities for Policy Reform(World Bank 1996), and Cities on the Move(World Bank 2002a). A fourth report on safe, clean,and affordable transport for development is in theconsultation stage. It is intended that this documentprovide a formal basis for an update of the Bank’s1996 strategy paper for the period 2007–15.The essence of the latest thinking is that virtuallyall the arguments that formed the basis of previousdocuments remainvalid, but today several issuesneed much greateremphasis—a view this evaluationconfirms. Finally, aninfrastructure action planfrom 2003 is also important and relevant becauseit launched a scale-up of Bank infrastructure investment,including transport. Each of these documentsis now briefly considered.World Development Report 1994In the early 1990s there was growing support forthe notion of greater participation by the privatesector in the provision of infrastructure. Thisstance was encouraged by arguments questioninginfrastructure’s inherent natural monopoly structures.For example, the theory of contestablemarkets was influential in airline deregulation.Gomez-Ibanez and Meyer (1993) reported that privatizationin transport on balance seemed to havebeen more beneficial than not but was not apanacea. The privatization solution, among otherthings, depended on the competitiveness of themarkets served and the extent to which efficiencygains could be realized.The Bank’s 1994 World DevelopmentReport (WDR)was the seminal documentpropelling the Bank towardthe greater use of theprivate sector in infrastructure.It concluded that many developingcountries would benefit througheconomic growth and poverty reduction ifincentives to providers were clarified andstrengthened. This could be achieved by givingmanagement more autonomy and focusing accountabilityon service to customers; by structuringthe sectors and relevant regulation in a mannerto promote effective competition; and by givingusers and other stakeholders more voice and responsibilityin planning andregulatory arrangements.Increased reliance wouldbe placed on the privatesector for the direct provi-The motor industry ispoised for strong growth,which heightens environmentalconcerns.The 1994 WDR propelledthe Bank toward greateruse of the private sectorin infrastructure.Private sectorinvolvement varies inintensity from onecountry to another.11

A DECADE OF ACTION IN TRANSPORTsion of infrastructure and services (including transport).Services would benefit from the positive experiencesin a number of countries in the industrialand developing world alike. Governments wouldconcentrate on creating and maintaining legaland regulatory frameworks to attract privateproviders. At the same time, they would safeguardthe interests of the poor, improve environmentalconditions, and coordinate cross-sector interactions.In urging consideration of increased relianceon private sector providers, the WDR alsorecognized that private involvement would inevitablygrow at substantially different rates in differentcountries. Those rates depend on privatecapacities, the ability of government to provide anappropriate regulatory framework, the performanceof public sector providers, and politicalconsensus in favor of private provision.Sustainable TransportThe ideas in the WDR were expanded on in the contextof the Bank’s 1996 Sustainable Transportpaper, which found that the dominance of the publicsector in the operation of transport services hadin some cases resulted in adverse effects. Those includedhigh costs, lack of flexibility in service provision,and assets not being properly maintained.Sustainable Transportencouragedsubstantial changes ingovernment’s role.To redress these shortcomingsthe report advocatedthe Bank to encouragesubstantial changes inthe role of governmentin transport, reducing its function as a supplierbut increasing its function as a regulator.It recognized that governments need tocreate a proper institutional framework for competition,set economically efficient charges for theuse of publicly owned transport infrastructure,and increase community participation in decisionmaking. The theme of “sustainability” was comprehensiveand intended to include economic, financial,environmental, and social sustainability.Cities on the Movefocused attention ontransport modes inurban areas.Cities on the MoveA few years later, a Bankurban transport strategy reviewentitled Cities on theMove (2002a) concentratedon the social exclusion aspects associated withurban inaccessibility. Its objectives were to developa better understanding of urbantransport problems and to articulate astrategic framework that could be appliedin developing countries. The report recognizedthat urban growth increases transport costs:“Economies of agglomeration generate the growthof cities. As cities grow and become richer, vehicleownership and use grow more rapidly than theavailable road space, resulting in increased congestionand traffic-generated air pollution.”The report also observed that the number ofmegacities—cities with more than 10 million inhabitants—isexpected to double within a generation.It recognized that increased use of privatevehicles in cities is contributing to falling demandfor public transport and a subsequent decline inservice levels. Sprawling conurbations have madethe journey to work excessively long and costlyfor many of the poorest people, while pedestriansand nonmotorized transport continue to beinadequately served. The paper concluded thattransport provision can play an important role insocial safety nets.Changes in Poverty-Reduction StrategiesDuring the mid-1990s, the prevailing view insidethe Bank was that the rapid growth in the volumeof private infrastructure investments would continueunabated. At that time there was also increasingconcern about the Bank’s public image,following potentially damaging opposition by sectionsof civil society to a handful of large but highprofileinfrastructure schemes. This undoubtedlyaccelerated a strategic shift in the Bank’s focus,from infrastructure to the public administrationand the social sectors (figure 2.1). 3The shift also reflected a growing view that thereshould be a more direct focus on poverty reduction,given the neglect of the social areas discussedin the context of the IDA ReplenishmentAgreements and of the Highly Indebted PoorCountries Initiative. Spending on infrastructurewas further dampened by the Asian financial crisis,which had a global knock-on effect for manydeveloping countries. From 1998 to 2002 the12

GLOBAL TRENDS, BANK STRATEGY, AND SECTOR OUTCOMESFigure 2.1: Trends in IBRD/IDA Lending by Major Sector Groups, 1991–200412US$ billion:3-year moving average108642Source: World Bank data.01991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004YearLaw, justice, public administrationInfrastructure (nontransport)Social sectorsTransportIndustry and tradeInformation and communication technologyAgricultureBank cut back its infrastructure lending from $9billion to about $5 billion per year; at 30 percentof total Bank lending this was an all-time low.Transport lending by IBRD and IDA peaked infiscal 1997 at an annual average of almost $4.0 billionbefore falling off sharply to $1.7 billion by fiscal2000.By 2002 it had become clear that the reduction ofinfrastructure lending was a cause for concern.There was general concurrence that for developingcountries total infrastructure investmentshould be in the region of 5.5 percent of GDP, butit was reported that only 3.5 percent was actuallybeing realized. Representatives of some large developingcountries expressed dismay that investmentsin intercity highways in particular werelagging behind. Private sector investment in infrastructurehad peaked globally at about $110 billionin the late 1990s before declining to around$58 billion in 2002. At the same time, there wasrecognition of the links among infrastructure serviceprovision, increased economic growth, andthe reduction of poverty as expressed in a numberof contexts, including the MDGs.A combination offactors, including greaterattention to povertyreduction, reducedattention on transportand infrastructure in thelate 1990s.The World Bank Group acknowledged that reversingthis trend required scaling-up infrastructurespending. It launchedan infrastructure actionplan to reassess and accelerateits infrastructurelending program. This planincluded anticipating clientdemand for infrastructure,rebuilding the knowledgebase, and creating newlines of business and instrumentsto meet emerging client needs. Figure2.1 shows how transport commitments by IBRD/IDA fluctuated immediately before and duringthe study period and illustrates the trends describedin this section.By the end of fiscal 2004 transport commitmentsat $3.7 billion had returned almost to the nominallevel experienced in fiscal 1997. Roads andhighways continued to dominate the new portfolio.Update of Sector PrioritiesThe Bank’s Transport Sector Board is currentlyupdating sector priorities for the period 2007–15in a draft document. This draft recognizes thatthe world’s thinking on economic developmenthas moved on and that initiatives such as the13

A DECADE OF ACTION IN TRANSPORTRecognizinginfrastructure waslinked to growth andpoverty reduction, theBank shifted itsattention back to thetransport sector in2002.MDGs are now central to thedevelopment debate. While thefundamental pillars of theBank transport strategyremain valid, the draft callsfor additional emphasison issues related to povertyreduction, internationaltrade, the environment(especially in cities),and safety.In four of the MDG goals, health and environmentalsustainability are crucial issues. In theseareas transport can contribute strongly by reducingroad traffic accidents, controlling vehicle emissions,and taking measures to restrict the transmissionof disease where transport has a role.Making transport more affordable is a major challenge;not only can high transport costs discouragetrade and economic growth, but they canalso reinforce the economic and social exclusionof the poorest people, both in the rural and urbancontexts. Although these policy issues are notnew, until recently they have not been accordedtop priority or applied in a sufficiently meaningfulnumber of projects.This review thus looks for evidence as to howthese issues have been addressed during the pastIncreasedinvolvementof the private sectorin transport improvesaccountability andefficiency, but theextent of investmenthas beendisappointing.10 years and suggests how theBank can learn from its experiencein changing its strategicemphasis. Recently the BankEnvironmentally and SociallySustainable Development Network(ESSD) was combinedwith the Infrastructure Network.The purpose of consolidatingthese two networks is tomainstream environmental issues,improve synergies, betterintegrate core operations, andstrengthen the focus on sustainability. Some of thelessons of experience described in this evaluationmay assist the deliberations emanating from thisnew alignment.Sector OutcomesEncouraging Competitive Markets/Assisting inBalancing the Roles of the Public and PrivateSectorsAt the broadest level there is little doubt that theWDR was correct in noting that increased involvementof the private sector in transport wouldimprove accountability and efficiency. That claimhas proved to be substantially correct in mostBank projects evaluated. Despite a few failures, accordingto the extensive background paper preparedon this matter, the vast majority of projectoutcomes worldwide have also been positive. Efficiencyand service indicators have typically shownsustained improvement following the introductionof private participation, while many projects havehelped establish the regulatory frameworks necessaryto safeguard the public from the abuse ofmonopoly power and to ensure compliance withsafety and other issues of public concern.However, the extent of investment by the privatesector in transport infrastructure has been disappointing.In the early 1990s there were expectationsthat the private sector would play asubstantial role in the provision of such infrastructure.Indeed, investment in developing countriesdid show early growth, but it peaked in 1997at $18.4 billion (figure 2.2).In 2002 it then collapsed to $2.9 billion as betteropportunities for scarce funds were perceivedduring a period of financial instability. Financial returnson transport projects were seen as beingvery long term and therefore risky. Confidence hasbeen restored just recently, with $16.2 billioncommitted in 2005. The Bank erred in reducingcommitments to transport infrastructure so severelyin the late 1990s, despite the warnings inthe Sustainable Transport paper that filling thegap through private sector funding was unlikelyto succeed.Increased private sector involvement in transportinfrastructure concessions has had positive effectson both technical and allocative efficiency. Herethe Bank has played a modest role in supporting14

GLOBAL TRENDS, BANK STRATEGY, AND SECTOR OUTCOMESFigure 2.2: Private Sector Investment in Transport Projects in Developing Countries,1990–200525,000US$ millions20,00015,00010,0005,00001994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005YearSource: World Bank data.toll-road concessions; it has played a more substantialrole in railway restructuring in Latin America(especially Brazil) and in support of railwaystransitioning from command to market economiesin Eastern Europe and Central Asia. The BankGroup has also given substantial support to privatizationof ports and waterways projects andmore recently to aviation projects.Helping Clients Achieve SustainableManagement of the SectorThe Bank’s main contribution to the road subsectorhas been through the encouragement ofprivate sector involvement in road and maintenancemanagement. It has had some success inimproving road department accountability, oftenby establishing road agencies and road funds andcontracting out to the private sector—not onlyconstruction and rehabilitation, but also routinemaintenance, design, and general supervision.Transparently competitive tendering of worksagainst performance-based specifications hasbeen a significant step forward.For the other transport subsectors, sustainabilityhas been less of an issue, because after the introductionof private sector business principlesand appropriate financial models, far fewer problemshave ensued. This situation assumes that governmentsmeet their obligations for subsidizingservices that are not financiallyviable but thatare deemed to be in thepublic interest and thatthey do not interfere inlabor issues.For urban transport there has been growing recognitionof the need for integrated efforts betweenpublic sector officials responsible for road infrastructure,traffic flow, and parking regulationsand the increasing number of private bus companies,with interdependent performance targetsjointly set. A key issue is whether the Bank has supportedenough projects of this nature.Supporting Transport Projects Contributingto Poverty ReductionMany transport projects indirectly supportpoverty reduction, but the linkages are frequentlydifficult to measure. The most important contributionof increased private participation inreducing poverty is through its effect on the efficiencyand costs of transport and consequentlyon the competitiveness of other sectors and ongeneral economic growth.Such effects often have astronger distributive dimensionin the transport sectorthan in other infrastructureThe Bank has hadsuccesses encouraginggreater private sectorinvolvement in roads.Many transport projectsindirectly supportpoverty reduction.15

A DECADE OF ACTION IN TRANSPORTsectors because of transport’s special role in thegeographical spread of development. In the literaturereview, however, no substantial evidenceof serious negative impacts on poor people resultingfrom transport privatization actions hasemerged.The distributional impact of transport projects isrelatively underresearched, but there is evidencefrom, for example, the rural road impact study inMorocco (appendix B) that village road improvementscan significantly affect school enrollmentand attendance. Similar evidence shows that clinics,nutrition programs, andUnder Bank leadershipan indicator of ruralaccessibility has beenestablished.even credit extension dependon transport in one way oranother, aside from the obviousdirect benefits from improvedaccess to producemarkets and from new employmentopportunities in road construction andmaintenance. Because transport provides accessibilityfor both rural villagers and urban slumdwellers, it is recognized as vital to achieving manyof the MDGs.Considerable international attention and fundinghave been made available toward the achievementof these goals, but one problem has been theunavailability of suitable indicators to measureprogress. Under Bank leadership the first indicatorhas now been established for rural accessibility.“Sustainable access to rural transport” measuresthe number of people who live within a 2-kmwalk of an all-season road. When other companionindicators are developed in the near future, itwill be possible to better quantify progress inpoverty reduction internationally because of improvedtransport infrastructure and services. Moreimpact studies on the effects of improved accessibilitywould, however, be beneficial.A further area that could be improved is theachievement of substantive and lasting capacitybuilding. During the past decade, results havebeen patchy in this area because the traditionalsector approach often appears to be inadequatefor tackling a problem that can cut across severalsectors. Recent moves to introduce programmatic,multidonor approaches may yield betterresults.Responding to Global Transport SectorChallengesThese have been identified as safety, reductionsin vehicle emissions, and improvements in transportaffordability. Every day around the world,more than 3,000 people die from road traffic injuries,with low- and middle-income countriesaccounting for nearly 85 percent of the deaths and90 percent of the injuries. Although the numberof deaths in industrial countries is declining, thefigure for developing countries is increasing rapidly;by 2020 it is predicted that road traffic injurieswill be the third leading contributor to the globalhealth burden.WHO and the World Bank have jointly produceda World Report on Road Traffic Injury Prevention(WHO 2004). It suggests that such injuries are agrowing public health issue, disproportionatelyaffecting vulnerable groups of road users in developingcountries. Road traffic injuries cost lowincomeand middle-income countries nearly 2percent of their GDP—often more than the totaldevelopment aid received by these countries.Sector-wide efforts to reduce the incidence ofsuch injuries have for the most part been fragmentaryand relatively ineffective. CompletedBank projects with road safety components havehad mixed results, and the outcomes have not alwaysbeen sustainable.The direction now is toward a more cohesive approachwhereby the problem would be tackled ona multidisciplinary and cross-sectoral basis. A similarcourse of action is being followed by the aviationsector with the ICAO, based on concernsabout deteriorating safety and security standardsin some developing countries.Road transport alone accounts for nearly a quarterof the man-made gases said to accelerate climatechange. Public transport offers clear advantages forreducing congestion and pollution, as well as forincreasing safety. Progress, however, has often16

GLOBAL TRENDS, BANK STRATEGY, AND SECTOR OUTCOMESbeen disappointing. Private vehicle users rarelypay the true costs they impose on society, andthis encourages urban sprawl. At the same time,decentralized cities with lower population densitiesand long trip distances increase the cost ofproviding public transport. The urban poor, whousually reside on city peripheries, are often marginalizedby the lack of accessibility. The Bank hasled some initiatives and prepared both generaland specific guidelines in this area, but much moreremains to be done.Policies to ameliorate the problem of poor airquality are gradually being implemented in the industrialworld, and some pioneering work hasbeen done in developing countries, especiallyBrazil and Mexico, and in some Asian cities. TheBank has been at the forefront of this activityand produced a report entitled Reducing Air Pollutionfrom Urban Transport (World Bank 2004a)aimed at national and local policy makers involvedin air quality management. Implementingthese ideas is still work in progress, especiallyin poorer countries where politicians are moreconcerned with pressing basic needs.Road transport accountsfor nearly a quarter ofthe man-made gasescontributing to climatechange.Progress on affordabilityhas been more substantive.The delivery of transportservices and infrastructurehas generally become moreefficient with greater involvementof the privatesector, but this has not alwaysresulted in savings passed on to the poor.Much more attention needs to be given to appropriatepro-poor subsidization policies and therelationship between land use and transport costs.Globalization and rising fuel prices have reinforcedthe pressures of market forces on transportproviders to ensure they are as efficient as possible.However, as demographic and factor costscontinue to rise, further innovation and experimentationwill become necessary. The Bank is aplayer but could become a real change agent inthis arena.17

Chapter 3: Evaluation Highlights• Transport lending commitments have fluctuated considerably duringthe review period. Roads dominate the portfolio.• India and China account for 42 percent of all transport commitments.• Average project size has increased over the past 10 years.• Project outcome ratings have steadily improved over the past decade.• Transport sector-wide approaches and program-based approacheswill need to be evaluated more systematically when initial projectshave been completed.• Greater donor cooperation looks promising despite coordinationissues.• Nonlending assistance and knowledge dissemination have beengiven insufficient attention.

3Bank Support to theTransport SectorTotal IBRD/IDA transport commitments fluctuated considerably over thepast decade (figure 3.1). At their highest volume, just under $4.0 billionin fiscal 1997, they constituted 21 percent of all Bank lending. Attheir lowest point, $1.7 billion in fiscal 2000, they were just 12 percent. Butthe average for annual commitments for transport, at 15 percent, was one ofthe highest shares of sector lending during the decade.Trends in Bank Lending to TransportThese fluctuations reflect the relative weight attachedto infrastructure in the Country AssistanceStrategies (CASs), mirroring the strategic thinkingat the time. The low point in 2000 came froma greater emphasis on the social and public administrationsectors, while the recent peak in2004 was a result of the increased priority accordedto infrastructure investment in general. Infiscal 2005 the upward trend dipped, because ofconstraints in IDA lending in Africa and postponedactivities in East Asia. However, the upwardtrend has resumed; based on the value of projectsin the pipeline, it is expected to stabilize at around$3.5 billion per annum.During the past decade an average of 84 percentof commitments for transport were preparedunder the Transport Sector Board, with the remaining16 percent prepared as part of projectsin other sectors such as urban or agriculture. Inthese latter cases, transport was typically a minorcomponent. On average, some 26 transport projectswere completed annually.Meanwhile, the averagetransport project sizehas shown an upwardtrend, from $100 million in1995 to $150 million in 2005(figure 3.2). The Bank’sPublic-Private Infrastructure (PPI) database fordeveloping countries shows that the concentrationof transport lending to the larger borrowers—such as Argentina, Brazil, China, India, and, morerecently, Indonesia and Mexico—has contributedto the increasing average project size becausethese borrowers have the capacity to managevery large investment programs.Most of the countries receiving the largest shareof transport lending are in the middle-incomegroup; the seven top countriesin the period 2001–05also featured in the preceding5-year period, withsome slight differences inThe majority of projectswere prepared under thepurview of the TransportSector Board.Lending has increasinglyconcentrated on a fewmiddle-income borrowers.19

A DECADE OF ACTION IN TRANSPORTFigure 3.1: Trends in IBRD/IDA Commitments for Transport, Fiscal 1995–2005US$ billionSource: World Bank data.Trend in IBRD/IDA commitments for transport4.0 20183.5▲17▲153.0▲1512122.5▲▲11910119 10▲▲2.0▲10▲▲ ▲1.51.03335321 22 20.5210.001995▲19961997 1998 1999 2000 2001 2002 2003 2004 2005Financial yearCommitments for transport in transport sector.Commitments for transport in other sectors.Commitments for transport in transport sector as percentage of all IBRD/IDA lending.Commitments for transport in other sectors as percentage of all IBRD/IDA lending.Percentage of all IBRD/IDAcommitmentsFigure 3.2: Trends in Average Project Size, Transport Sector Projects versusAll Other Projects, Fiscal 1995–2005US$ million1801601401201008060401995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005Fiscal yearTransport Sector Board projects All other projectsSource: World Bank data.ranking order (table 3.1). India recently displacedChina as the largest borrower, while Brazil isranked third, Indonesia fourth, and Argentinafifth. These five countries currently account for 54percent of all transport lending.The concentration of transport commitments inChina and India has increased from 31 percent to40 percent of all transport lending over the pastdecade. An analysis of all nontransport Bank commitmentsfor the same period (appendix A, table20

BANK SUPPORT TO THE TRANSPORT SECTORTable 3.1: IBRD/IDA Commitments for Transport ($ billions): Share of Top 5 and Top10 Countries, Fiscal 1995–2000 and Fiscal 2001–06CommitmentsCommitmentsfor Share for Sharefiscal of total fiscal of totalCountry 1995–2000 (%) Country 2001–06 (%)China 4.2 24 India 4.2 25Brazil 1.7 10 China 2.3 14India 1.3 7 Brazil 1.1 7Russian Federation 1.2 7 Indonesia 0.6 5Argentina 1.1 6 Argentina 0.5 3Indonesia 0.6 3 Vietnam 0.5 3Mexico 0.6 3 Mexico 0.4 3Bangladesh 0.5 3 Colombia 0.4 2Vietnam 0.4 2 Congo, Democratic Republic of 0.3 2Poland 0.4 2 Egypt, Arab Republic of 0.3 2Total (all other countries) 5.9 33 Total (all other countries) 6.2 34Total 17.9 100 Total 16.8 100Share of top 5 countries 54 54Share of top 10 countries 67 66Source: World Bank data.A.1) shows that the focus on India and China is lessmarked and has fallen from 17 percent of all commitmentsin fiscal 1996–2000 to 11 percent in fiscal2001–05. This means that the transport share ofthe India and China portfolios has been growing ata time when their overall portfolios have been diminishing.In both cases this was driven by high-levelnational government perceptions that aspects oftheir development vision were being hamperedby insufficient transport infrastructure investment.Bank transport commitments for the top 10 borrowershave shown a marginal decrease over thedecade, from 67 to 66 percent (table 3.1), whilethere has been a larger decrease in nontransportcommitments, 59 percent to 53 percent (appendixA, table A.1). This means that overall the transportsector is gradually increasing its share ofBank lending to middle-income countries. Whilethis helps address concerns about the dwindlingdemand overall for Bank loans from this group ofcountries, it raises questions as to whether the balancebetween middle- and lower-income countriesis appropriate.Twenty percent of transport commitments are toupper-middle or high-income 1 countries, 42 percentare to lower-middle-income countries, and theremaining 38 percent are to low-income countries(less than $825 per capita), mostly financedthrough IDA credits. IBRDproject outcomes are similarto those of IDA, but onaverage the sustainabilityof IBRD projects is superior(77 versus 68 percent).Although the IDA share hasbeen variable, in recent years it has accountedfor roughly one-third of transport commitments.In India and China, theshare of lending fortransport has grown ina diminishing portfolio.Final disbursements in aggregate are nearly alwayslower than commitments, because in only a fewprojects are all commitments actually used. Thiscan be because of changing needs and circumstancesor because of exogenous factors affectingthe projects. During fiscal 1995–2005, about 83percent of Middle East and North Africa Bank Regioncommitments were disbursed, comparedwith 80 percent for East Asia and the Pacific, 7821

A DECADE OF ACTION IN TRANSPORTpercent for Africa, 77 percent in South Asia, 60 percentin Europe and Central Asia, and only 55 percentfor Latin America and the Caribbean.The reasons for the lower levels of disbursementin the latter two Regions include the cancellation,scaling down, or curtailment of large projects incountries such as Brazil, Colombia, Mexico, theRussian Federation, and Turkey because of financialcrises, changing circumstances, or, occasionally,noncompliance with Bank requirements. IEGbackground research indicates that transport projectsare more vulnerable to postponement whenfinancial crises occur because the short-term impactsare less visible and the repercussions morepolitically manageable than for cutbacks in health,education, and social spending.Overall Project PerformanceIEG ratings of the overall project outcome ofTransport Sector Board projects show that theperformance has been consistently better in comparisonto nontransport projects (table 3.2). In themost recent period, fiscal 2004–06, satisfactoryoutcomes have been achieved at a level 10 percentagepoints higher than for all other Banksupportedprojects; sustainability is likely in 7 percentmore projects. However, the percentage ofprojects with an institutional impact of substantialor better that formerly exceeded the percentagefor all Bank-supported projects is now about thesame, in part reflecting a trend toward less challengingtransport projects (see chapter 7).An issue sometimes raised by clients or Bank staffis that, although transport projects have beenperforming better than projects in other sectors,projects in the transport sector are relatively narrowlyfocused. In other words, roads predominatein the portfolio. There is also some evidence fromthe Quality Assurance Group (QAG) and fromthe results of the staff interviews that multifacetedurban projects are sometimes avoided whenpreparation time is lengthy—because of the needto attend to many safeguard issues, multiple stakeholders,and major environmental issues, thusincreasing the risk of failure.Progress in institutional development has been attributableat least in part to greater private sectorinvolvement and a more commercial approachto road management (see chapters 4 and 5).Table 3.2: IEG Ratings of Overall Project Outcome, Institutional Development, and Sustainabilityby Exit Year, Fiscal 1992–2006 (Transport Sector Board projects versus all other Sector Boards)Fiscal Fiscal Fiscal Fiscal FiscalIEG Rating Board 1992–94 1995–97 1998–2000 2001–03 2004–06Outcome: Transport All projects 69 78 84 86 89Moderately satisfactoryExcluding largeor better (%) borrowers a 71 70 82 74 88All other 64 67 68 72 79Institutional Transport All projects 25 37 63 68 57development:Excluding largeSubstantial or better (%) borrowers a 27 33 57 66 50All other 30 32 37 45 57Sustainability: b Transport All projects 46 55 70 74 78Likely or better (%)Excluding largeborrowers a 47 43 66 71 71All other 44 47 54 64 71Source: World Bank data. See also figures in appendix A.a. Argentina, Brazil, China, and India.b. Resilience to risks of future net benefit flows.22

BANK SUPPORT TO THE TRANSPORT SECTORAlthough sustainability ratings have shown steadyimprovement, they are likely overstated for countrieswith weak capacity. This is the category mostfrequently downgraded in subsequent PPARs, 2where the assessments are usually made 2–4 yearsafter project closure. Overall, table 3.2 shows inall categories lower ratings if the four largestclients are excluded; this is generally becausesuch countries have substantial institutional capacitycompared with many poorer countries.Modal ComparisonsThe most striking aspect of table 3.3 and figureA.4 in appendix A, showing the modal distributionof Bank commitments, is the predominance of theroad sector. For fiscal 2001–06 the percentageshares for railways (eight), aviation (three) andports (three) are relatively small. Urban transportis mostly classified under “general transport.”A deeper analysis shows, however, that ifurban roads and streets are added from the generalto the roads category, then the percentageshare of transport commitments that are roadrelated rises to almost 80 percent of the portfolio.Meanwhile, the shares for railway and portprojects have slightly decreased, and those for aviationand general transport have slightly increased.RoadsIn virtually all countries, roads and highways arethe predominant form of land transport, frequentlycarrying more than80 percent of passengerkilometers and a significantpercentage of freight tonkilometers.3 Not surprisingly,a correspondinglylarge number of the transportprojects supported bythe Bank are also road projects(rural, urban, and intercity),and in general the physical objectives ofthese projects are implemented successfully.Of the 97 Transport Sector Board road projectswith specific physical upgrading and rehabilitationobjectives completed and evaluated, 79percent have been ratedmoderately successful orbetter on outcome (seetable 3.4). These resultswere fairly equally distributedthrough the variousregions. IEG’s recordsshow that on average aneconomic rate of return(ERR) of 29 percent wasachieved during the pastIEG ratings for transportprojects have normallybeen better than forother projects but areless satisfactory whenthe top four borrowersare excluded.The transport sector isrelatively narrowlyfocused because roadspredominate; projectswith a long preparationtime are sometimesavoided.10 years; sound supervision practices and advicefrom the Bank were often indicated in both ICRsand PPARs as important reasons for the positiveoutcomes.Table 3.3: IBRD/IDA Commitments for Transport ($ billions): Distributionby Transport Mode, Fiscal 1995–2000 and Fiscal 2001–06IBRD/IDAIBRD/IDAcommitmentscommitmentsfiscalfiscalTransport mode 1996–2000 (%) 2001–06 (%)Roads 13.0 73 11.9 73Railways 1.5 9 1.3 8Ports 1.2 6 0.5 3Aviation 0.1 0 0.5 3General transport 2.2 12 2.2 13Total a 17.9 100 16.3 100Source: World Bank data.Note: “Multimodal” projects have been redistributed among the appropriate modes.a. Totals may not add up exactly as a result of rounding.23

A DECADE OF ACTION IN TRANSPORTTable 3.4: Transport Sector Board Projects, Fiscal 1995–2006: Analysis ofPerformance by Physical Infrastructure ObjectivesNo. ofNo. ofclosed objectives Ratedprojects rated moderatelywith physical moderately satisfactoryobjectives satisfactory or betterSubobjective rated by IEG or better (%)Roads and highways (greenfield) 14 11 78Roads and highways (upgrading and rehabilitation) 51 40 78Rural roads (local) 15 12 80Urban roads 17 14 82Aviation (public) 3 2 67Ports and inland waterways 13 10 77Railways 14 11 78All physical infrastructure 127 100 79Source: World Bank data.Most road-upgradingprojects achieve theirphysical goals.Examples of good practicein road projects, wherebysound design and constructionlead to positive ERRs,stand out in many countries,including Armenia, China, Lao People’s DemocraticRepublic, Latvia, Nicaragua, and Peru. In Peru significantimprovements were made to rural accessibility,and transport tariffs for freight declinedby between 9 percent and 15 percent. In Nicaraguathe project’s success was in part due to successfuldonor coordination.A variety of mechanismshas been introduced toimprove maintenance.Cases do exist of outrightfailure or very serious delays,but these are mainlyin countries that have experiencedpolitical instability such as Guinea-Bissau, Haiti, Niger, and the Republic of Yemen.In the north of the Republic of Yemen the 157-kmHarud-to-Huth road took more than 10 years tocomplete because of a combination of factorsranging from damage caused by flash floods, toslope instability problems, to civil disturbances thateventually resulted in military protection beinggiven to contractors to finish their work.developing countries reviewed (World Bank 1988).Having to rehabilitate paved roads too frequentlybecause of neglect could conservatively be morethan three times as expensive for the road authorities(based on undiscounted costs) as maintainingthem on a regular basis. 4Despite the Bank’s emphasis on adequate andtimely road maintenance, this objective was seldomsatisfactorily accomplished. The limited funds allocatedto roads were often wasted through inefficientwork methods and too much spending onnew construction at the expense of the maintenancebudget. As a result, a high proportion of theroads in developing countries remained in poorcondition.In response, the Bank in 1995 supported a newapproach. By that time, governments in manycountries were beginning to improve the servicesand efficiency of infrastructure by private sectorparticipation in road operations. This includedmaintenance by contract, competitive tendering,and improvements in management and accountabilitythrough the establishment of roadagencies, funds, and boards.24As far back as 1988, the Bank estimated that roadinfrastructure with a value of $45 billion had beenlost because of inadequate maintenance in the 85At the same time, scarcity of government tax revenuesencouraged some countries to seek alternativefinancing mechanisms, such as toll con-

BANK SUPPORT TO THE TRANSPORT SECTORcessions and surcharges on fuel costs. In caseswhere roads were carrying traffic volumes in excessof 10,000 vehicles per day, those roads werepotential candidates to be tolled to generate revenue.This approach has developed significantlyover the decade, and the Bank has often playedthe role of facilitating the right environment. IFChas made commitments to only two toll roads duringfiscal 2001–05 (see chapter 4).Through urban road projects the Bank has also becomeinvolved with issues related to traffic congestion,traffic management, and externality costs.The pressure for additional road space is relentless,with the pool of motor vehicles worldwide growingby 3 percent annually. Concerns increasinglycenter on exhaust emissions, continued relianceon fossil fuels, and a worsening road accident rate.RailwaysFor nearly a century railways worldwide were at theforefront of technology in passenger and freighttransport. But from the early 1930s their primacybegan to erode, with increasing competition fromother modes of transport. Rail technology has notkept pace with competing transport technologies,but for the conveyance of bulk commoditiesand the transport of goods in containers over longdistances, the mode remains competitive. For socialor environmental reasons, many countriescontinue to operate uneconomic rail services thatare dependent on subsidization, while others havenot invested sufficiently to replace aging infrastructure,or have allowed the buildup of a relativelylarge and unproductive labor force.This situation is exacerbated in many developingcountries, especially in Africa, where railways wereoriginally constructed to carry mineral exportsfrom the interior to the coast and where volumesof general freight are often insufficient to maintaina viable service. Passenger traffic has to some extentshifted away from the railways, but in some developingcountries, such as India, this moderemains important for the mass movement of lowincomepassengers. Indian Railways tariff policiesthat overcharged freight to subsidize passengertravel caused a loss of freight traffic to road transport.However, the organization currently is undergoinga major transformation.Over the years the Bank has had mixed experienceswith railways. In 1993 an IEG review of lessons andpractices from railway projects showed that onlyabout half of the 40 projects completed between1985 and 1992 were considered satisfactory (IEG1993b). Principal reasons for the shortcomingswere insufficient authority of railway managementover rates; the lack of a commercial approach tothe transport market; resistanceto change by railwaymanagement, laborunions, and government institutions;inefficient operations;and the Bank’sreluctance to penalize failureto comply with loancovenants. Traffic in almostall the projects evaluatedhad been expected to growto some degree; yet in practice freight traffic declinedin more than half of these railway systems.This rather sobering analysis led to greater selectivityin railway projects whereby the potentialborrowers had to demonstrate their commitmentto a change process 5 and more thorough preparatorywork had to be undertaken. There was alsogrowing interest in railway concessions followingthe accomplishments in Argentina in the early1990s and later in Brazil, in which the Bank wasinvolved. Although the Bank has supported anumber of railway privatizations,the preference insome parts of the world (especiallyAsia) is to continueto support state-owned railways.In such cases Bankpolicy permits assistance toachieve more efficient andRailways remaincompetitive fortransporting bulk goods,but many countries stillsubsidize uneconomicoperations, especiallypassenger services.Limited success withrailway projects led toincreased selectivity inthe 1990s and betterresults.effective operations of the public rail companies,while encouraging opportunities for private sectorparticipation and the privatization of noncorebusinesses, where feasible.In the countries of Eastern Europe and the Commonwealthof Independent States that are makingthe transition from command to marketeconomies, there has been a major contraction inthe rail market. This was caused by the restructuringof extractive and heavy industries at the25

A DECADE OF ACTION IN TRANSPORTsame time that the privatization and subsequentgrowth of road transport was occurring. In theRussian Federation, which has by far the biggestrailway system, there has been extensive rethinkingof the country’s future railway needs, supportedby the Bank and other internationalfinancial institutions.Fourteen Transport Sector Board railway projectsapproved during fiscal 1996–2005 have beenclosed and rated by IEG. The overall percentageof projects with a moderately satisfactory ratingor better on outcome is 78 percent. This was a significantimprovement over the earlier assessment,following the tightening of railway appraisal proceduresand improved support through the developmentof a railway toolkit. If the seven railwayprojects falling under other sector boards areadded, the percentage with a positive outcome ratingis still 71 percent.Most success has been achieved in the Latin Americaand the Caribbean Region, primarily in Brazil,and in East Asia and Pacific; in fairness, however,scrutiny of some of the projects in Asia showsrather less demanding development objectives(more focus on physical infrastructure and rollingstock than on restructuring). An attempt at restructuringthe railway in Indonesia was unsatisfactory,mainly because of a change in governmentpriority after the Asian financial crisis. The AfricaRegion also showed improved performance withsatisfactory projects in Côte d’Ivoire (where theneed for operating and capital subsidies was eliminated),Malawi, and Zambia. Reasons for some ofthe less successful projects were mainly lack ofgovernment commitment and inadequate preparation(as in Tanzania).A major reason for the success of concessions(see chapter 4) has been the Bank’s willingnessBank willingness tofund retrenchmentcosts has helpedimprove the success ofrail concessions.to fund retrenchment costs andprograms to improve opportunitiesfor workers who nowhave to make a new livelihood.A project for the Polish Railwayscommencing in 2001 ledthe way in this respect whensome 37,000 railway employees were redeployed.This may be considered as best practice for railwaylabor restructuring. Zambia is a good exampleof a similar program in Africa.Ports and Inland WaterwaysThe number of ports and inland waterway projectsapproved by IBRD/IDA has fallen slightly overthe past decade, but IFC commitments have increased.Thirty projects involving ports, harbor operations,and water transport and representingnearly one-quarter of the IFC transport portfolioby value were recorded during the study period(see appendix D). IBRD/IDA has focused largelyon establishing appropriate regulatory frameworks,helping secure transaction advisors (toassist with the process of transferring operationsto the private sector), or advising on trade and facilitationprojects.Thirteen completed and evaluated projects relateto ports and waterways. Successful outcomes areevident in 77 percent of these projects. Best practice,on the basis of an outcome rating of highlysatisfactory in a PPAR, was found in Mauritius,where the country’s trade competitiveness wasgreatly enhanced through increased capacity, efficiency,and productivity.Recently there has also been growth in the numberof inland waterway projects in the active portfolio,especially in China, and a major trade andfacilitation initiative has been undertaken in southeastEurope. The ICR Review confirms satisfactoryprogress on streamlining border crossing points,with substantial savings in truck waiting time andin the productivity of customs officials and otherborder activities.AviationWhile completed aviation projects are relativelyfew in number, the extent of active projects hasshown an upswing in the past 3 years. This risinginterest in aviation is in part driven by increasingconcerns regarding safety and security.For example, the Board recently approved the firstregional air transport safety and security project26

BANK SUPPORT TO THE TRANSPORT SECTORfor West and Central Africa. All six Regions now includeaviation projects in their portfolio and areadvised by a dedicated aviation specialist. IFC,having made no commitments for airports andairlines between fiscal 1990 and fiscal 2000, hassupported seven projects in the past 5 years,committing $147 million. Aviation projects accountfor 26 percent of Multilateral InvestmentGuarantee Agency (MIGA) exposure.Regional Lending TrendsFigure 3.3 shows that the East Asia and Pacific,South Asia, and Africa Regions have been the mostactive of the Regions. The East Asia and Pacificeconomy has grown by more than 7 percent annuallyfor the past 15 years, driven by the dramaticgrowth of China, Malaysia, Thailand, and Vietnam.Countries such as Cambodia and Lao PDR, however,remain relatively poor. The increasing affordabilityof motor vehicles in the high-growth nations isstraining existing transport capacity. Cities accountfor 70 percent of the Region’s GDP growth, and thistrend is likely to continue. Decentralization hasbrought new challenges in formerly centralizedeconomies such as Indonesia and the Philippines.China remains the dominant borrower in theEast Asia and Pacific Region, with a Bank portfoliothat is almost 80 percentIBRD financed.The Bank Group isbecoming more involvedin the aviation sector.The South Asia Region hashad average annual growthrates of nearly 6 percent. The public sector remainsdominant in roads and urban passengertransport. Treating the Region as a whole, however,obscures major intraregional differences ininstitutional capacity, such as between India andBangladesh.The relatively high levelof activity in Africa isintended to improve theterms of trade andalleviate poverty.Africa has until recentlybeen another growth areafor transport commitmentsbecause the Bank realizedthat excessive transportcosts continue to be ahindrance to the Region’sdevelopment (the Regioncurrently contributes less than 2 percent to totalworld trade). The recent leveling off of commitmentsis attributable, according to Bank management,to IDA constraints to funding in theRegion. Ethnic unrest and civil war have alsosometimes made it difficult for the Bank to provideeffective support, but a strategy is in place toFigure 3.3: Trends in IBRD/IDA Commitments for Transport by Region1.21.0US$ billion0.80.60.40.20.01995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006Fiscal yearSub-Saharan AfricaEast Asia and PacificEurope and Central AsiaLatin America and the Carribbean Middle East and North Africa South AsiaSource: World Bank data.27

A DECADE OF ACTION IN TRANSPORTmove quickly when the situation in a country improves,as in Angola and Liberia.Until recently Europe and Central Asia experiencedonly modest growth in transport commitments,but IEG verified that more projects are nowin the pipeline. Here the emphasis has been onthe transition to market economies after the collapseof the Council for Mutual Economic Assistanceand the breakup of the former Soviet Union.The Middle East and North Africa Region, meanwhile,despite highly unstable geopolitical conditions,has also seen a modest upturn in commitmentsin support of strategies for acceleratinggrowth and employment. Yet the Region has lostglobal market share in many export sectors, andnon-oil exports represent just 1 percent of theworld share. Although a number of factors havecontributed to this situation, improved transportinfrastructure will be needed to reverse thisposition.Only the Latin America and the Caribbean Regionhas seen a significant decline in commitments,primarily because of fiscal space constraintsin several countries. The Bank Group’s responsein the transport sector has been to encourageefficiency through greater private sector participation.The Region clearly needs to invest muchmore in transport infrastructure, however, whereinvestment has halved since 1985 and the gapwith East Asia and Pacific is widening.IFC’s transport portfolio is heavily focused onLatin America and the Caribbean, which accountsfor 67 percent of transport commitments, comparedwith 37 percent for other Regions. Thispattern of concentration in Latin America andthe Caribbean reflects good progress toward privatizedinfrastructure and transport services. LatinAmerica and the Caribbean also has a strong institutionaland regulatory framework to supportprivate investment in the sector.Regional OutcomesIf IEG performance ratings for outcome are comparedover the review period, the Middle Eastand North Africa, Latin America and the Caribbean,and East Asia and Pacific stand out (figure 3.4).Only South Asia is lagging slightly. Sustainabilityis most often rated likely in the Middle East andNorth Africa, South Asia, and Latin America andthe Caribbean; Africa has the worst performance.Institutional development impact has been mostsubstantial in Latin America and the Caribbean andSouth Asia and least substantial in the MiddleEast and North Africa.Figure 3.4: IEG Ratings for Outcome, Sustainability, and Institutional Development(Appoval Year Fiscal 1995–2006)10080Percentage6040200Sub-SaharanAfrica (79 projectsrated)East Asiaand Pacific(44)Europe andCentral Asia(54)Latin Americaand theCarribbean (53)Middle Eastand NorthAfrica (25)South Asia(20)Outcome: moderately satisfactory or betterSustainability: likely or betterInstitutional development: substantial or betterSource: World Bank data.28

BANK SUPPORT TO THE TRANSPORT SECTORThe overriding conclusion from staff and stakeholderdiscussions on the Regional portfolios,however, is that a customized approach to transportinvestment in each Region is essential.Regional and Donor CooperationThe Bank works in close cooperation with othermultilateral development institutions. 6 All suchinstitutions see the advantages of working togetherboth formally and informally. But as the JointEvaluation of the Road Program in Ghana found,there are often practical difficulties that have to beovercome. The most notable example of this is theneed to clearly identify project contributions to nationaldevelopment objectives such as poverty reductionthrough a well-functioning monitoringand evaluation system; there is also a need forgreater focus on institutional capacity building.Donors sometimes have priorities that are notnecessarily “owned” by the client country. Problemsalso stem from different donor proceduresfor implementation, monitoring, accounting, andreporting (appendix B). The willingness to harmonizethese approaches deserves further explorationbut will involve working through a seriesof complex issues. An area of cooperation that hasattracted significant interest in recent years hasbeen the Sub-Saharan Africa Transport Policy Program(SSATP) (see box 3.1).In the past few years sector-wide approaches(SWAps) and program-based approaches 7 havebeen introduced, whereby specific investments oractivities are developed in a country-led sector programwithin a common multidonor developmentframework. These programmatic approachesshow promise for enhanced development supportin transport and related sectors, but their outcomesneed to be fully evaluated over the next fewyears. The advantages of pursuing SWAp arrangementsare stronger country ownership and leadership,greater flexibility, better policy dialogue andtransparency between the partners and stakeholders,greater focus on results in a programmaticframework, economies of scale, and probably abetter approach to capacity building.Some difficulties with SWAps encountered to datein other sectors include problems in adaptingdonor policies and proceduresto SWAp requirements,donors with agendasspecific to their own policiesand mandates (it isoften easy to reach agreementon overarching developmentobjectives; thedifficulties arise in the details),and donors that find they can no longermeet their original commitment or disbursementtargets. In all cases the importance of strong andcontinuing leadership of such programs wasstressed. Transport sector SWAps have commencedin Brazil, China (Fujian), Mexico, Poland,and Vietnam but as yet have not been completedand evaluated.Nonlending AssistanceKnowledge ManagementIn 1996 the Bank made a commitment to becomea global knowledge bank. To this end, it substantiallyupgraded its information management systems,initiated a wide variety of new activities forthe aggregation and sharing of knowledge, andaimed to foster a more open, knowledge-sharingculture within its staff. This section looks at howwell the transport sector has responded to thischallenge.An IEG evaluation on sharingknowledge (IEG 2003) concludedthat, overall, the Bankhad made more progress inestablishing the architectureto support its knowledge initiativethan in creating the governance arrangementsand work processes to carry it out. Theassessment went on to say that the Bank needs tomove deliberately to embed knowledge sharing inits core operational processes. It can do this by providingmore direct support to task teams andmore knowledge capacity enhancement for clients.An analysis of transport sectorreports was undertakenfor this evaluation coveringresearch papers, sectorreports, publications, andDonor coordination isimportant andsometimes excellent,but many practicaldifficulties still have tobe overcome.Multidonorprogrammaticapproaches showpromise.The transport sector hasa low number ofknowledge productsrelative to other sectors.29

A DECADE OF ACTION IN TRANSPORTBox 3.1: Sub-Saharan Africa Transport Policy ProgramThe SSATP was launched in 1987 as a joint initiative of the Bankand the United Nations Economic Commission for Africa with thesupport of the donor community. It responded to the need for acceleratedimprovement of transport sector performance in Africa.The work program comprised a Road Management Initiative; RuralTravel and Transport Project; urban transport, railway management,trade and transport, and human resources and institutional development.The last component, however, did not attract funding.The program is managed by the Bank on behalf of the stakeholders.Currently there are 31 active member countries.In the late 1990s some donors reduced their budget allocations,expressing concern about the program’s relevance, the degree ofaccountability of program management, and the extent of involvementof recipient partner countries. This led in 2001 to a strategicreview conducted by the Netherlands Economic Institute. The reviewfound that the program had become fragmented, with variouscomponents being managed independently. Consequently, itdid not fully reflect the donors’ objectives to use SSATP as a platformfor integrating poverty-reduction issues; nor did it meet theneeds of member countries, which viewed the program as top downand supply driven.Despite these criticisms, none of the stakeholders wanted theprogram discontinued because there was unanimous agreementthat it was an important platform for knowledge sharing, exchangeof good practice ideas, and networking. It also had the potentialto do much more. The Bank, for its part, acknowledged that it washampered because the program manager was only part time andbecause frequent changes in program staff led to discontinuity incoordination.Since the review, however, there has been a considerable effortto upgrade governance and management of the program,through improved transparency, accountability, and responsiveness.The program agenda is back in the hands of the stakeholders andpartners, and its focus is primarily on the contributory role of transportin Africa’s development, connecting with the aims of the NewPartnership for Africa’s Development. The Bank has installed a fulltimeprogram manager as well as other specialist expertise and hasbeen active in supporting the long-term development plan for2004–07, supported by a budget of $26 million.A full independent evaluation is scheduled for 2007, althoughit is not clear what outcomes would be measured, because the planfocuses mainly on outputs. But nearly 75 percent of the Africa Regionstaff interviewed by IEG responded positively to the Bank’s continuedinvolvement in the improved SSATP. They referred especiallyto the solid progress of the Road Maintenance Initiative and to the27 member countries operating road funds—most of which havesecured independently audited “ring-fenced” income sources—and to the progress with railway concessions. Others mentionedthe heightened awareness of strategic planning, and all spoke ofdissemination (there are nearly 400 SSATP publications).Not everyone was supportive, however. Critics were unconvincedthat the program was cost effective, observed that themeetings were cumbersome, and noted that there is little apparentconnection between planning and implementation activities.It is too soon for IEG to assess whether the revitalized SSATP is asuccess.Sources: NEI 2001a, 2001b; World Bank 2003b, 2005e.newsletters produced between 1995 and 2005. 8Table 3.5 shows that there were 437 documentsduring this period covering transport sector issues.9 In comparison with the Bank as a whole forthe same period, this represents just 4 percent ofall Bank knowledge documents—a rather lowpercentage for a sector that accounts for 15 percentto 20 percent of Bank lending. Moreover, asthe transport sector is highly heterogeneous, involvingmultiple modes and themes, it might havebeen expected to have had a greater share of analyticaloutput. The lack of a global program to coordinate,finance, and support transport researchfor developing countries is a factor; other sectorssuch as health and agriculture are not disadvantagedin this way. Industrial countries currentlyconduct most existing transport research, andcomparatively little is directed at developing countries.Although the Bank’s role is not to fill this gap,it can and does show leadership and does act asa catalyst for research to be carried out when appropriate.Table 3.5 shows no journal articles andrelatively few publications.Prior to this evaluation, there had not been a detailedreview of the Bank’s literature for the trans-30

BANK SUPPORT TO THE TRANSPORT SECTORTable 3.5: Count of Research Papers, Sector Reports,Publications, and Notes/Newsletters: Transport Sectorversus Other Sectors, 1995–2005TransportAll Transport sector sharesectors sector (%)All working papers 5,599 226 4.0Sector reports 756 42 5.6Publications 1,689 40 2.4Newsletters/notes 1,908 129 6.8Journal articles 25 0 0.0Total 9,977 437 4.3Source: World Bank data. Also see appendix G.port sector. Reports that focused primarily ontransport were also poorly represented amongthose sampled for the annual “Quality of Economicand Sector Work” assessments 10 conductedby QAG between 1998 and 2002, although thosedocuments that were included received satisfactoryratings overall. 11Knowledge ProductsAfrica is a major recipient of knowledge products(table 3.6); the Region’s widespread povertyaccounts for the large number of Poverty ReductionStrategy Papers (PRSPs). Europe and CentralAsia ranks second and has experienced demandfor the most Public Expenditure Reviews.An analysis of 87 CAS Reports for the period fiscal1994–2005 shows that while 79 provided ratingsfor infrastructure, only 18 mentioned transportspecifically. The most frequently mentionedtransport issues raised in the CAS documents (appendixA, table A.3 has a full list) are fairly predictableand include the elimination of transportThe lowest awarenessof transport issuesincludes urban, social,risk-management, andenvironmentalconcerns.bottlenecks, the need for institutionalreform and capacitybuilding, and inadequatefinancing for road maintenance.More noteworthy arethe topics mentioned less frequently.For example, muchless is said about urban transportplanning and transportrelatedaspects of the environment, social issues,road safety, risk management, knowledge dissemination,and measuring project progress andperformance.Table 3.6: Economic and Sector Work Strategy Documents by Region, 1995–2005East Asia Europe and Latin American Middle Eastand Central and the and SouthDocuments Africa Pacific Asia Caribbean North Africa Asia TotalCEM 10 13 19 19 7 9 77PER 19 11 22 13 2 5 72PRSP 25 5 9 4 1 3 47CAS 50 21 42 37 12 11 173Total 104 50 92 73 22 28 369Source: World Bank data.Note: CAS = Country Assistance Strategy; CEM = Country Economic Memorandum; PRSP = Poverty Reduction Strategy Paper; PER = Public Expenditure Review.31

A DECADE OF ACTION IN TRANSPORTMany of the CASs for the top 15 borrowing countriesrated infrastructure as high, but only Braziland Ghana mentioned transport specifically. In theBrazilian case, the issues are transport decentralization,rehabilitation of state and federal pavedroads, privatization of rail freight, urban transport,bottlenecks, and multimodal transport. InGhana inadequate roads are seen as a bottleneckto agricultural marketing; the need to improve financialmanagement in the sector is also discussed.In general the issues raised as prioritiesin the update of sector strategies are also rarelyraised in the context of transport, which is indicativethat an integrated approach involvingthe transport sector is not “top of mind.”Analytical and Advisory Assistance IncludingEvents and Technical Papers Prepared byOperational StaffIn terms of analytical and advisory assistance(AAA) support, the sector has witnessed a sharpdecline in economic and sector work (ESW) from35 in fiscal 2005 to 19 in fiscal 2006. Technical assistanceinitiatives also declined from 17 in fiscal2005 to 9 in fiscal 2006. Though the quantity relativeto many other sectors is small, there havenevertheless been some significant papers, presentations,analyses, and workshops by Banktransport staff and outside experts. Several of thepeer-reviewed papers and publications are recognizedas having made an important contributionto transport development knowledge.Examples are papers on road funds, railway reform,reduction of vehicle air pollution, transportdecentralization, and road safety.In IEG’s view, two main factors emerge from thiswork. One is that the poorer countries are muchPioneering work hasbeen undertaken inBrazil in support oftransport privatizationinitiatives.less well covered than themiddle-income countries;the other is that more workis needed in the areas thatwill present major challengesin the future. Somespecific examples follow.In India, the more important AAA work coverspresentations on railway restructuring experiences,road financing and rural roads, urban transportstrategy, and a comparison of strategic roadplanning approaches between India and China. Areport entitled India’s Transport Sector: The ChallengesAhead (World Bank 2002c) has probably hadthe most impact, because it was prepared on thebasis of extensive consultations with senior centraland state government officials, private institutions,and many experts. Judging by the extentof consultation, it is likely that the analysis and recommendationsare shared by the majority of theparticipants. Many of the road and port proposalshave been carried out, although the move towardrail reform is only now commencing.In Latin America and the Caribbean the Bank hasbeen particularly active in Brazil, where 11 policyand analytical reports have been produced sincefiscal 1995. These reports are associated with allthe areas of transport in which the government ofBrazil has promoted privatization initiatives. Indicationsfrom the Brazilian stakeholders’ surveyshow that the Bank has had close and positive dialoguewith the relevant decision makers. Becausethis assistance was backed by large loans, the Bankalso had strong credibility. The studies focused onthe railways, multimodal freight transport, andurban transport reform. Bus/metro integrationand, in Recife, the establishment of a body thatcould coordinate all public transport services areconsidered pioneering works in the Region.In the Russian Federation and Commonwealth ofIndependent States countries’ sustainable urbantransport policies and railway restructuring wereamong many topics discussed. Some of this workresulted in papers useful for more general application,such as how to implement reforms necessaryto deregulate, liberalize, and accelerateprivatization and how to improve urban transportinstitutional capacity, introduce appropriatefunding mechanisms, and establish fare levels forpublic transport. In the Europe and Central AsiaRegion generally, the emphasis has been on asmaller role for government and improvementsin the climate for private participation. Specific paperswere prepared for Poland and Kazakhstan,among others.32

BANK SUPPORT TO THE TRANSPORT SECTORIn Africa, the IEG country case study of Tanzaniashows a somewhat different perspective. In thepast 25 years the Bank has not carried out a formalpiece of sector work either for the transportsector as a whole or for individual transport modes.However, other mechanisms have been used to developpolicy options. Some SSATP papers focusedspecifically on Tanzania, such as one that analyzedroad sector reforms and another that focused onnonmotorized transport. In addition, the privatizationprogram (ports and railways) was analyzedin documents prepared under the Bank’s publicsector program. The SSATP plays an important rolein dissemination in Africa at a strategic level, butit is independent from the Bank activities.There are also several papers and guidelines by individualBank staff and other transport experts thatthe Sector Board recommends for staff guidance.The more important of these can be accessed fromthe transport Web site and have been rigorouslypeer reviewed; these Web sites also contain toolkitsand useful links to other Web sites. All Regionsand a few country offices (including India, Turkey,and Vietnam) have made an effort to provide transportinformation on their country Web sites.The Bank’s transport AAA work, based on commentsin the literature, stakeholder feedback,and IEG judgment, appears in general to be ofgood quality, covering both sector and policy support.However, it tends to focus on the largercountries such as Argentina, Brazil, China, Mexico,Poland, and the Russian Federation to thedetriment of the smaller ones (exceptions areLao PDR and the Pacific islands). In addition, thetechnical assistance or policy analysis components(according to many of the staff interviewed)would not have succeeded without being linkedto investments in physical assets, which makethe often painful organizational and policy changesrecommended more palatable to implement (forexample, the development of second-generationroad funds in Sub-Saharan Africa and the urbantransport institutional reforms in Brazil).The degree of success of Bank-financed technicalassistance studies is mixed, according to clients’perceptions of their relevance and value. Sometimes,as in China, the former Yugoslav Republicof Macedonia, Vietnam, and the Republic ofYemen, not all the studies were viewed as useful;they either commenced late or the recommendationswere not pursued. Some studies preparedby consultants were too voluminous and technicalto be easily understood and displayed inadequateregard for political and financial feasibility.In contrast, the RussianFederation urban transportstudy was extended to allowfor additional studies on railwaysand national roads, andfurther advisory work onurban transport issues was carried out simultaneouslyusing other funds. IFC has also supportedthe transport sector with technical assistance andadvisory services delivered by its Trust Funds(TATF) and Advisory Service Departments. Betweenfiscal 1990 and 2005, TATF supported 39projects with a total cost of $5 million. Typically,TATF projects were related to privatizations andfeasibility studies on private operation of ports andshipping, air transport, and cargo facilities.Training and DisseminationThe sector board has overall responsibility fortransport learning and knowledge management.It sponsors various events for the purpose oflearning, exchanging information, and supportingstrategy formulation (appendix G); it also maintainsthe Bank’s transportWeb site, which has beensubstantially upgraded. Anearlier attempt to create aknowledge asset databasewas abandoned; all informationis now filed in the Bank’sQuality analyticalwork has beenimportant to progresson institutional reform.The Sector Boardis still developinga knowledgedisseminationplan.electronic filing system. The sector is still workingtoward a formal knowledge-disseminationplan and a system for capturing all presentationsoriginating from country offices.The World Bank Institute (WBI) is the learning armof the Bank. WBI aims to help its clients preparefor the knowledge-based economy by designing33

A DECADE OF ACTION IN TRANSPORTand delivering courses and seminars, promotingknowledge networks and communities of practice,and providing policy and strategic advice. Trainingand policy dialogue relating to the transportsector conducted by WBI over the past 8 years hasbeen focused heavily on competition and regulationissues. This in part reflects the knowledgeThe transport-relatedoutput of WBI does notappear to be fullyaligned with the needsof transport operations.of WBI staff, whose expertiseis primarily in financialmodeling, regulation, andinstitutional arrangements,including how to establishsuccessful public-privatepartnerships (PPPs).Twenty-seven WBI transport-related events wereconducted between October 1997 and March2005. The attendees have primarily been seniorand middle management government officials.Although these events have been well received,based on the feedback obtained at the conclusionof the seminars, only one of the events was subjectedto a “level-two” evaluation by the WBI EvaluationGroup. 12There is an apparent lack of connection betweenthe needs of transport operations and the outputof WBI. There is also no dedicated programfor transport, and it is unclear whether the WBIfocus countries align with transport sector priorities,because transport in some cases has not featuredstrongly in some country strategies. WBIdoes not have transport skills outside the narrowarea described above, and there is limited interactionbetween WBI and the Transport SectorSome countrystakeholders criticizethe Bank forineffective knowledgedissemination.Board. To make up for thislimited coverage, the networkhas developed linkswith some specialist partnerspromoting particularareas of training in developingcountries. 13Despite all the publications and presentationsmentioned in this chapter, all three country stakeholderopinion assessments undertaken as partof this evaluation contained some degree of criticismabout effective knowledge dissemination. InBrazil only 4 of 18 stakeholder respondents unequivocallyranked Bank dissemination highly,while 3 thought it was ineffective. The remainingstakeholders thought dissemination was satisfactory,but with caveats—the biggest of which wasthat few documents were available in Portuguese.Cities on the Move was, however, translated intoPortuguese with the help of the Bank Country Officeand São Paulo; thousands of copies were subsequentlydistributed to Brazilian professionals,students, universities, and to other lusophonecountries. Most respondents suggested that amore structured country approach was neededthat involved government, academics, and stakeholders,taking advantage of local transport events.In Tanzania the feedback contained the followingcomment:The Bank has not been effective in disseminatingits know-how. Bank expertsare very knowledgeable but meet and sharetheir experiences with relatively few people.Stakeholders often do not have ready accessto publications and newsletters and theInternet is not accessible by some people.In the Indian survey, the perceptions on disseminationwere much more positive (reflecting thefact that more activity is taking place there). However,even here it was said that there was insufficientpriority given to urban and intermodaltransport issues.The staff interviews in the Bank transport networkalso elicited some interesting comments, suchas, “We need to disseminate more effectively, butwe are all too busy to share innovation successfully,”“We need less pressure [on task teamleaders]—then we can improve operationalquality and dissemination effectiveness and ensurewe stay abreast of developments in ourfield,” and “We now lack the depth of internationallyrenowned experts who have led innovativethinking in the past.” 14These comments suggest that the right balancebetween projects and advisory work has not yetbeen achieved. Certainly at the Regional level,management has not yet considered knowledge34

BANK SUPPORT TO THE TRANSPORT SECTORsharing as a way of doing business through embeddingit in core lending and nonlendingprocesses. Relatively few CASs contain knowledgesharingobjectives and strategies, and many staffmembers believe that they lack incentives tomake knowledge sharing a routine part of theirwork.IEG believes that regular discussions with clientsto customize their knowledge requirements couldalso lead to better opportunities for policy dialogue.Such dialogue is also pursued through thelending projects themselves—but this is notrecorded.At a Regional level,management has notyet accepted knowledgesharing as a way ofdoing business.Results from the stakeholderinterviews indicate that nonlendingassistance in thetransport sector is of goodquality, but in quantity it isinsufficient, compared withthe rest of the Bank. It needsto be planned more strategically with better resourcesand more interaction with both staff andclients if it is to progress beyond its present status.This implies that more effective sharing of resourcesbetween networks is necessary. Clearly therecent merging of the Infrastructure with theESSD Network is a positive step in that direction.35

Chapter 4: Evaluation Highlights• Greater involvement of the private sector has often led to improvedperformance and better service.• Six middle-income countries account for 80 percent of private sectortransport infrastructure investment.• In many cases, urban passenger services could be improved bybetter-regulated private sector competition.• The Bank has made a major contribution to the roads subsector bypromoting private sector road and maintenance management.• IFC has increased its investments in transport.• There must be sufficient local capacity to engage with the privatesector and a supportive regulatory framework.• Corporatization can succeed if accompanied by a variety of otherreforms.

4Promoting PrivateSector InvolvementAlthough experience shows that in some circumstances greater useof the private sector can achieve considerable efficiencies, this is acomplex and sensitive area and client commitment to such changesis crucial.The balance between the public and private sectorroles in transport varies by country, dependingon history, culture, sociopolitical circumstances,and policy choices that may, for example, place ahigh premium on national security, including ownershipof national assets. However, because privatelyowned transport services are widespreadand usually successful, the Bank has encouragedsuch services, either within a competitive marketor, where the market is more restricted, within thesupport of an appropriate regulatory framework.Government provision of such services has frequentlybeen found deficient in technical and allocativeefficiency. Privately owned transportinfrastructure, in contrast, is much less commonfor a number of reasons, including its monopolisticnature, financial returns that are often verylong term (and therefore risky), and the disputableperception that the public good can onlybe assured by public ownership.Improvements in theprovision of transportservices require the rightbalance of private andpublic sector reforms.The levels at which the balance between the publicand private sectors in transport can be changedare oversight, execution, and finance. Oversightgenerally involves user participation in the planningand regulatory aspectsof sector operations.Execution refers mainlyto how institutions actuallyundertake their work,including the extent towhich public institutionssubcontract to private enterprisesand how they do this. Finance means thelevel at which the private enterprise provides someor all of the capital financing that would otherwisehave come from the public sector.At one end of the spectrum are government departmentsthat execute the work with their ownlabor forces; at the opposite end are private enterprisesthat fully undertake this responsibility.In between are many alternative structures for theassignment of risks and responsibilities at themanagement level (see appendix A, table A.5). 1International Trends in PrivatizationA detailed review of worldwide experience intransport privatization was used to provide abenchmark for best practice in achieving publicand private sector balance. The Bank’s activities37

A DECADE OF ACTION IN TRANSPORTEarly expectations forthe extent of privatesector investment wereoverly optimistic.are assessed against thebenchmark. (See summaryof this work in appendix B.)As already noted, in theearly 1990s there were expectationsthat the private sector would play a substantiallymore significant role in the provision oftransport infrastructure and services. Some ofthese expectations, especially regarding infrastructure,were impractical, and the authors of SustainableTransport (World Bank 1996), whilesupporting an expanded role for the private sector,were cautious about the extent to which theprivate sector could increase its role. The Bank hasa PPI database that tracks infrastructure projectsin developing countries involving private participationin funding and risk taking. 2The period fiscal 1995–2005 was very volatile.Despite early growth, it peaked in 1997 with a totalexpected transport investment of $18.4 billion,Six middle-incomecountries account for 80percent of private sectortransport infrastructureinvestment in thedeveloping world.then plunged to $2.9 billionin 2002. In 2005 it recovered,rising to $16.2 billion.During 2005 significant newprivate sector investmentswere recorded for Hungary,India, and Turkey, with aviationand port projectsstrongly featured.The PPI database does present an optimistic picture,because it represents commitments ratherthan actual disbursements. 3 It also excludes followonand locally financed activities, some of whichare funded by the private sector. 4 Just six countries(Argentina, Brazil, Chile, China, Malaysia, and Mexico)accounted for nearly 80 percent of total investmentover the decade. Thus, the remaining 20percent is distributed among all other developingcountries, with many having no significant privateinvestment at all. Compilations by the ChileanCentral Bank for the six main Latin Americaneconomies show a similar pattern, relative to thesmaller countries in the Region.This does not necessarily mean that attractingprivate sector investment is less relevant for lowerincomecountries. One or two projects can havea very significant impact, as has been the case inCambodia and Mozambique. In the latter country,the railways and port restructuring project isalso benefiting neighboring states by reducingRegional transport costs.There has been important progress in recent yearsin the institutional design arrangements in theOrganisation for Economic Co-operation and Development(OECD) countries. Examples includethe establishment of a highways agency and therailway reorganization in the United Kingdom,Australia’s rail privatizations, and the broadeningof responsibilities assigned to the Australian NationalRoad Transport Commission, as well as newmethods of bus contracting in Norway and otherEuropean countries. Some of these internationallyrecognized successes have since been adapted inprivatization initiatives in developing countries. Itis noteworthy, however, that major weaknessesthat emerged in some of the earliest privatizationefforts—such as Chile’s urban public transportreforms, Argentina’s freight railway concessions,and Mexico’s toll roads—have largely been avoidedin the reform efforts introduced by developingcountries in the past 10 years. It is also generallyrecognized that effective institutional change takestime.The most clearly positive effects of the WDR principleson efficiency have been in the roads field.Those principles have been applied to the managementof road networks generally and stronglypromoted by the Bank. This has included improvementsin road department accountability,often through the establishment of road agenciesand road funds; contracting out to the privatesector has also occurred, not only for constructionand rehabilitation but also for routine maintenance,design, and general supervision. Transparentlycompetitive tendering of works againstperformance-based specifications has been a significantstep forward.In contrast with these reforms, which are largelyaimed at improving the quality of public spending,toll roads have offered opportunities forattracting more private investment into the38

PROMOTING PRIVATE SECTOR INVESTMENTdevelopment of road networks. Growth of privatelyfinanced toll facilities has been an importantphenomenon during the decade. In a fewdeveloping countries, there are now substantialnumbers of such roads, and many other countrieshave at least one or two. Although such roads representonly small proportions of each network,they often carry significant proportions of overalltraffic.There is considerable evidence that the pursuit ofincreased private sector involvement in traderelatedport and railway infrastructure has hadpositive effects on both technical and allocativeefficiency. This has been the case even wheresubstantial modifications have subsequently hadto be made to the original structures chosen forincreased private participation (as in the railwaysin Britain). Positive impacts have often been furtherenhanced by subsequent effects on otherinstitutions in the same field, such as in India’sNhava Sheva container terminal, or through thepostprivatization restructurings that occurred inthe railways of Australia, southeast Brazil, andnortheast Mexico.Efficiency and service indicators have typicallyshown sustained improvement, and traffic growthhas tended to exceed that of the regional economy,reflecting in part the attraction of traffic previouslyhandled by other modes and facilities.Analyzing worldwide movements of containersthrough ports, it has been estimated (Estacheand Serebrisky 2004) that the share handled bypublic sector operators dropped from around 42percent in 1991 to 27 percent by 2001.Overly centralized, government-owned and-operated urban passenger services, torn betweenconflicting objectives, still exist in many cities.Such services would often benefit greatly fromrationalization and restructuring. A more commonchallenge is to develop better-regulated competitionamong existing private providers to generatea more reliable and safer set of services that linkappropriately with one another. This scenario typicallyexists in the difficult context of rapidly increasingcity size and worsening street congestion.Such regulated competitionis usually brought aboutthrough an urban publictransit authority that will introducecompetitive concessionsand franchises withspecific performance objectives,but within an integratedsystem.Developed countrysuccesses havebeen adapted toprivatization initiativesin developing countrieswith some good results.Finally, the pressures of increasingly open competitionin the provision of international and domesticair services have brought measurableimprovements to the technical efficiency of airtransport. The rise of lowcostcarriers, now extendingto many of the larger developingcountries in Asiaand Latin America, has alsocontributed to transport’sallocative efficiency. Privatemanagement of public airportsis a relatively recent innovation; whether ithas contributed to these efficiency improvementsis not yet clear.Efficiency and serviceindicators have beenimproved by privatesector involvement inports and railways.At the broadest level, the review finds that thestrategy suggested in the WDR has stood the testof time in OECD countries. In developing countriesthere is also evidence that greater involvement ofthe private sector, especiallyin service provision, usuallyleads to a significant improvementin transportsector performance. Nevertheless,for the foreseeablefuture, the public sector indeveloping countries will remainthe principal provider of infrastructurebecause of investment risk factors and public ownershipissues.Urban passengerservices in many casescould be improved bybetter-regulated privatesector competition.Bank Performance in EncouragingPrivate Sector InvolvementThe Bank’s experience in encouraging the privatesector through its own lending and support programsis now compared against the above assessment(table 4.1).39

A DECADE OF ACTION IN TRANSPORTTable 4.1: Analysis of Performance by Private Sector Development Objectives,Transport Sector Board Projects, Fiscal 1995–2006Objectives rated moderatelyNo. of PSDsatisfactory or betterobjectivesSubobjective rated by IEG Number PercentPorts and port restructuring 9 6 67BOT (roads) 5 4 80Maintenance by contract 34 27 79Railway restructuring 14 11 79All PSD 62 48 77Source: World Bank data.Note: BOT = build, operate, and transfer project; PSD = private sector development.Road ConcessionsSector PerformanceThe Bank has accumulated a significant amountof knowledge about PPPs and is asked with increasingfrequency for technical advice on suchprojects by its clients. During the review period,however, the Bank was directly involved withthe establishment of relatively few toll-road projects.Of course, part of the reason for this is thatroads are viable for tolling only where trafficvolumes are high and local institutional capacityis sufficient to effectively engage with the privatesector. In some middle-income countriesthe use of tolls in PPP projects has matured sufficientlyso that neither theclient nor the private financierssee a need for BankGroup support. The Bank’sexpertise is nevertheless activelysought in many other cases, includinggreenfield construction projects.The Bank’s adviceon such PPPs isfrequently sought.In Brazil, for example, a Bank review of the highwayconcession program involving six state authoritieswas undertaken. IEG concluded in aPPAR evaluation of this initiative that the Bank hadgiven useful advice at both federal and state levelsat a critical time. Typically, the Bank has givensupport to many countries on land-acquisitionprocesses and tariff setting or has offered partialrisk guarantees.Europe and Central Asia is an interesting case becauseinitially the Bank did not support the firstwave of PPPs in the Region, many of which weredeemed likely to fail. However, the Bank has morerecently developed innovative solutions, such as reimbursabletechnical assistance, to assist its clientsin, for example, the Russian Federation and Hungary.To ensure a comprehensive analytical andadvisory program, the Bank has developed a feefor-servicearrangement aimed at strengtheninglocal capacity. This was used in the city of Saint Petersburgduring the construction of its high-speedring road. There is interest by governments in theRegion in extending this type of service to coverRegional growth trends, economic competitiveness,investment climate monitoring and benchmarking,and asset management services.Project PerformancePositive development outcomes have been in supportof build, operate, and transfer (BOT) projectsin Benin, Chile, China (box 4.1), and India. Allhave made satisfactory progress and Bank supporthas enhanced project performance.The only unsuccessful project involved a Bank loanto Colombia to finance the government’s capitalcontribution to a toll concession project. Thiswas among the first operations to use Bank supportfor a privately funded project. The supportcame through credit enhancement instruments40

PROMOTING PRIVATE SECTOR INVESTMENTBox 4.1: Mobilizing Private Finance for Road Development in ChinaToll roads began to appear in China in the 1980s, when the centralfinance ministry began requiring provinces to accept full responsibilityfor payment of debt service on loans from which they benefited.But acceptance of the principle that roads could earnrevenue directly also opened the way to private participation.Today, China has more tolled roadway than any other country,probably near 20,000 km.Given the importance central government placed on roads—in the last years of the 1990s road investment reached 2.5 percentof GDP—the provinces have eagerly sought new ways to supplementtheir budgetary funds. Promoters of private finance respondedimaginatively, and the market developed, often in parallelwith the legislative changes that would make it fully legal. By thelate 1990s, 5 percent to 9 percent of the funds going into road developmentwere from private sources.The original mechanism for private financing was the joint venture.Joint ventures occurred mainly with private partners from HongKong and public management and staff provided by the ProvincialCommunication Department (PCD). The Hong Kong promoters negotiatedspecial agreements to compensate for the uncertain legalenvironment and sometimes carried out the construction work. Fromthe mid-1990s, and especially after approval of a new highway lawin 1997, a second source of private capital rapidly developed—theHong Kong, Shenzhen, and Shanghai stock markets.Investor interest in road transport was strong. Holding companies,mainly provincial expressway development companies, assembledpackages of already operating toll roads and floatedshares for some 20 percent to 40 percent of the aggregate valueof the roads.By 2002, 18 Chinese companies had successfully listed, in additionto the three main Hong Kong promoters. Several of theprovinces have been able to reinvest substantial proceeds into furtherroad development. Some of the stronger companies havealso been able to float revenue bonds and to raise bank loans securedagainst their revenue streams. Initiatives to develop BOT projects,though welcomed by the central authorities for theirefficiency-increasing potential, have not so far won significantsupport among PCDs.Insufficient information is available to permit a full assessmentof the impact the private participation has had on the technical andallocative efficiency of these toll-road operations. However, regardingallocative efficiency, concern is widespread and rising thatPCDs and private promoters have often pushed toll rates to levelsthat divert substantial traffic to other roads. The problem is particularlyserious for heavily laden trucks, which would usuallycause far less damage on the stronger pavements of the newroads than on the old roads to which they divert.A partial solution has been to introduce tolls on the competingroads as well. The Jiangsu Expressway Company followed itscompletion of the Huning expressway in 1996 with the purchaseof 15-year operating rights on the parallel Ninghu highway so thatit could itself adjust the tolls on both. Although it seems that toomuch weight is given to financial profitability over maximization ofeconomic benefits in setting toll levels, this is more a problem ofthe existing toll system than of the private participation in it. Insofaras the latter introduces incremental capital, permitting fasterexpansion of the road network, it should have some beneficial allocativeconsequences.Sources: Bellier and Zhou (2003); CPCS China Merchant Consulting (2003); Ojiro (2003); Wood (2002).offered at the bidding stage. The successful bidderrequested the lowest government capital contribution,nearly $83 million short of the nexthighest bidder. But it did not request any of theother support instruments available. Unfortunately,construction was significantly delayed, andthen a dispute arose between the concessionaireand the national roads agency over a proposedchange in the road alignment. In June 2000 allegationsof a breach of contract led to litigation. Theearly termination of the concession made it impossiblefor the project to attain the developmentobjectives in the manner and time agreed.IFC commitments for roads during the study periodhave been relatively small and declining—10projects, of which 8 were completed during fiscal1996–2000 ($190 million committed) and only2 between fiscal years 2001 and 2005 ($64 millioncommitted). The first transport project insured byMIGA was in 1995 (see appendix C).Other RoadsSector PerformanceThe Bank’s main contribution to the road subsector,however, has not been through conces-41

A DECADE OF ACTION IN TRANSPORTThe Bank’s maincontribution in roadshas been the promotionof private sector roadand maintenancemanagement.sions, but through the encouragementof private sectorinvolvement in road andmaintenance management.Examples include the clarificationof road department accountability,often reinforcedby the greater managementautonomy that is createdfrom establishing a roads agency separate from itssupervising ministry; appointment of oversightand consultative bodies more representative ofusers and the commissioning of periodic useropinion surveys on the state of the network andadequacy of service; development of networkwide-planningsystems for efficient allocation ofexpenditures and the setting up of high-qualitydata banks to underpin them; transparently competitivecontracting to the private sector, not onlyof construction and major maintenance but also ofroutine maintenance, design, and general supervision;and the shift to multiyear contracts with remunerationrelated to the level of service affordedby the assets built or maintained.Project PerformanceTwenty-two of 26 (87 percent) closed projectswith the above objectives achieved satisfactory outcomeratings—by any standard an excellent performance.More detail on performance is given inthe next chapter on sustainability.RailwaysSeventy-one percent of evaluated railway projects(from all sector boards) with major restructuring,private sector participation, and/orconcession objectives were successful. Brazil,Mexico, and Romania were among the best examples;the outcomes in Indonesia and Tanzaniawere unsatisfactory.Governmentcommitment has beenthe key to success inrailway concessions.Government commitmentand realism was a commonthread in the successful projects.The government ofBrazil achieved its overall objectiveof reducing the cost ofrail freight from $2.9 per ton-km to $1.6 per tonkm.In Mexico, traffic increased, equipment wasbetter utilized, safety improved dramatically, andall concessionaires generated income coveringoperating costs without affecting investment requirements.The outcome of the Romanian railwayproject was rated highly satisfactory becauseit fully achieved its objectives. Most noncore activitieswere separated from the operating companies.With regard to urban rail and subwayconcessions, the achievements in Buenos Airesand Rio de Janeiro were groundbreaking andhave proved to be sustainable over the pastdecade.Lessons from the difficulties in the Tanzanian RailwaysCorporation project were to not make theoriginal bid condition too onerous and to ensureadequate remuneration for services that are noteconomically viable. This deterred potential investorsfrom submitting compliant bids. However,the Bank has persevered. In a second roundof bids the requirements have been softened.This new round also offers an option to obtain aWorld Bank Partial Risk Guarantee that will protectthe operator should the asset-holding companyfail to meet its obligations.A recent review of railway concessions in Sub-Saharan Africa found no evidence of excessiveprofiteering; in fact, it suggested that increasingrail competition benefited transport users firstand foremost through lower road transport costs(World Bank 2006g). IEG also notes that the truecosts of track renewal need to be acknowledgedup front, so that a seemingly favorable debt structuredoes not mask obligations in future years.Railway projects in the Europe and Central Asia Regionhave met with mixed success. Romania hada highly satisfactory project in which a new regulatoryand organizational framework was introduced,substantial progress was also made withfinancial restructuring, and staff size was reducedby 47 percent. Bulgaria and Croatia were relativelyless successful because the authorities did notshow the same determination to make necessarybut difficult changes. Because these projects arestrongly influenced by the European Union (EU)restructuring model, which is now being promotedbeyond the Region, it would be useful to42

PROMOTING PRIVATE SECTOR INVESTMENTassess the performance of this cluster of railwaysystems in aggregate in the near future to seewhat lessons can be derived.Many countries are not yet prepared to take thefull step toward long-term concessions and preferto pursue restructuring within the public sector.Bank experience, confirmed by IEG, suggeststhat corporatization alone is insufficient to makeany significant difference. If accompanied by awell-thought-out package of reforms, however, itcan result in a much more efficient organization.Typical components of such a package would includehow the public shareholder (responsibleminister) discharges the duties of performance accountabilityand meets social obligations. The selectionof the board and senior managementshould be based on merit, and the lines of businessstructure should have segmented responsibilityfor management and accounts. Businessplans should include a strategy to enhance serviceand improve productivity, while investmentsshould be aimed at creating competitive advantagein specific markets. Activities that are not part ofthe core business should be competitively procured.Client countries that have successfully followedthis reform process include Morocco,Poland, and Romania. Railway reforms in Asia alsooccurred but to date have been more limited inscope. IFC commitments for rail freight and passengeroperations during the study period haveincreased from five projects in fiscal 1996–2000($52 million committed) to nine projects in fiscal2001–05 ($202 million committed); outcomeshave been mixed.PortsDuring the fiscal 1996–2005 period IBRD/IDA wasinvolved in 13 completed and evaluated port andwaterway projects; 77 percent rated satisfactoryor better on outcome. The Bank Group encouragesa commercial approach through the separationof the landlord and operating functions. Inthis approach the public sector landlord is responsiblefor maintaining the channels, wharves,utilities, and common areas, while services suchas cargo handling and tug services are contractedout to the private sector.Before this can happen, anew regulatory and administrativeframework usuallyhas to be set up. Such projectsalso provide an opportunityto introduce physicalimprovements such as newor rehabilitated berths, storagefacilities, and cranes (Albania, Korea, and Mauritius);improved customs and security facilities andprocedures (Tanzania); “freeport” facilities (Mauritius);5 and asset management systems (Poland).Container terminals are also often privatized as separateentities (Cameroon and Tanzania). Typically,the investments lead to greater volumes of traffichandled, with fewer delays and improved porthandling productivity.Only a few problem instances have been recorded;these include a delay on decisions about the introductionof additional cargo handling companies(to increase competitiveness), failure to investin additional crane capacity as traffic increases, andoverestimating expected traffic volumes at appraisal.The high success rate overall is becausesuch concessions are normally profitable, theneed for retrenchments is usually modest, and theinvestments are focused in one location.During the review periodthe IFC also made commitmentsof some $427 millionto 30 port and harbor operations.Bearing in mindthat IFC commitments dependon many factors, IFC’scontribution actually supportedtotal project investmentof $2.1 billion.The Bank Group hasencouraged theseparation of the portlandlord and operatingfunctions.The Bank Group hasprovided effectivesupport for establishingthe regulatory andadministrativeframework for portprivatization.Overall Transport PerformanceIt is clear that the Bank’s expertise is valued by itsclients in a variety of PPP ventures, includinggreenfield construction projects. To ensure thatBank clients understand the importance of ensuringthat environmental, safety, and social considerationsare properly covered in such projects,constant dialogue needs to be maintained, includingpresentations, workshops, and field visits43

A DECADE OF ACTION IN TRANSPORTfor local staff to see successful projects elsewhere.The Bank facilitated a useful debate, for example,on the pros and cons of different approachesto PPP projects in China and India.Overall, about a third of Bank transport projectshave significant privatization or commercializationobjectives, and three-quarters of the outcomesare in positive territory. IFC, in contrast, as the privatesector wing of the Bank Group, focuses entirelyon private sector investments. Among asample of 22 IFC projects evaluated, 19 achievedhigh development outcomes and 15 had highinvestment outcomes. These results compare favorablywith other projects across IFC. Transportinvestments represent an increasing proportionof IFC’s portfolio, split approximately 90 percentas loans and 10 percent as equity. Additionalfunds raised in the form of B-loans 6 from otherlenders also showed a higher mobilization raterelative to other sectors (see appendix D formore detail).44

Chapter 5: Evaluation Highlights• Management and accountability are improving in countries whereroad funds, agencies, and boards are functioning properly.• Performance-based road contracting has been successful incountries with a mature contracting industry and supporting legalframework.• The Bank has generally supported the provision of maintenancethrough user charges.• The Bank needs to help clients achieve a new level of governanceand institutional capacity, but this will require a stronger crosssectoralapproach.• Bank-supported road projects have a satisfactory record on environmentalcompliance but need to encourage energy savings andclean air more actively.

5Road Maintenance,Institutional Development,and EnvironmentalProtectionGiven that the transport sector accounts for 15 percent to 20 percent ofBank lending and the huge sunk investments 1 in transport infrastructurein client countries, the continuing sustainability of these networksis highly important. The cost of maintaining and renewing road infrastructureis a burden for many governments, but this amount is dwarfed by the magnitudeof related transport expenditure by private individuals and firms.Maintaining the AssetsWhen the quality of road infrastructure is poor,the public pays heavily through significantly highervehicle-operating and personal time costs and, inthe worst cases, through a lack of accessibilityfor at least part of the year during the rainy seasons.Because roads account for a very substantialshare of the Bank’s transport portfolio, thesustainability of such infrastructure has long beena concern.The importance of maintenance is not confinedjust to roads but applies also to the provision oftransport services. Sustainable Transport (WorldBank 1996) emphasized that ensuring the longtermsustainability of transport requires that all assetsbe maintained adequately. In the managementof public infrastructure, this is frequently hamperedby inadequate budgeting and follow-up formaintenance, accentuated when governmentstake the “soft” option of deferring maintenanceduring a debt crisis (Heggie and Vickers 1998). Inthe supply of transport services, regulated pricescan be set at levels that are too low to provide forthe adequate maintenance of equipment. Nevertheless,where the Bank Group has been involvedin concessioning, once any backlog of maintenancehas been attended to and a financial modelput in place, few further maintenance problemshave been reported. The greatest challenge stillremains with roads, most of which fall within thepublic sector domain.Road maintenance activities worldwide are normallyfinanced through one of two approaches:through the budget or by means of a road fund.Budget allocations to the road sector result froma political process that assigns priorities to alternativeuses. It can also form part of a multiyear expenditureframework. 2 Road funds, in contrast, are47

A DECADE OF ACTION IN TRANSPORToutside the budget and based on the principle thatroad users should pay for the cost of the roads andthat revenues generated should be applied tocover such costs. A key reason for setting up a roadfund is that road maintenance is not a politicallyattractive use of government revenues, eventhough road maintenance yields the highest economicreturn. 3The Bank’s ApproachIn practice, the Bank has supported channelingrevenues from road user charges to finance roadmaintenance expenditures in many countries.Such road funds, commonly known as “secondgeneration”funds, 4 commenced in 1993 with theZambian Road Fund. A more detailed accountcan be found in appendix B.Over the years there has been vigorous debateabout the merits and demerits of such funds.Some macroeconomists, including in the InternationalMonetary Fund (IMF), take the view thatextrabudgetary funds fragment the budgetaryprocess and create unnecessary risks in the allocationof resources. Eventually the Bank and theIMF agreed on a formal coordination procedureregarding the establishmentSecond-generation roadfunds have improvedroad management andaccountability.of such funds. 5 The Bank hasbeen pragmatic and tends topromote road funds whenthe budget approach hasfailed.The road fund approach, when broadened to includethe principles embodied in the 1995 HeggieReport (World Bank 1995), can better be describedas a commercial approach. The perceived roadmaintenance crisis, with its impact on the cost ofinfrastructure and the operation of transport services,required bringing roads into the marketplace,putting them on a fee-for-service basis,establishing a surrogate market discipline, andmanaging them like a business. Coupled with thecreation of a road fund, there has usually been asemi-autonomous executiveRoad fundsare promoted whenthe budget approachhas failed.road agency to manage theprimary network, along witha public-private board to runit. The board’s extensive monitoringand auditing oversighthas generally helped significantly to ensure thatuser charges to support maintenance are duly collectedand devoted to the intended purpose. Localcontractors have benefited from long-standingefforts to support their development and nowhandle most of the maintenance work. In Tanzania,the road board also helps address the previouslyneglected problem of weak capacities ofdistrict and urban councils to manage maintenanceof the extensive networks for which they areformally responsible.Project-Level ResultsIn a few countries where second-generation fundshave been introduced and where information isavailable, there has been evidence of a significantincrease in the percentage of roads in goodcondition. For example, in Benin, the increase hasbeen 9.4 percent per year since the creation of theroad fund. In Guatemala, the percentage of roadsin poor condition dropped from 40 percent in1994 to lower than 20 percent in 2001.However, country progress varies widely. As recentlyreported from an SSATP study (Benmaamar2006), the existence of a road fund does not meanthat it is either fully efficient or fully autonomous.There are currently 27 road funds in SSATP membercountries, and in only one-third of the casesare such funds regularly meeting routine expenditureneeds.The IEG review used three different sources to assessthe performance of road funds: existing evaluations;IEG’s database, including findings inindividual project assessment reports; and a surveyof Bank staff responsible for road projects incountries with road funds. Information from eachof these sources is limited, and none individuallypermits the derivation of conclusive results.Historically, projects have assessed performance bycomparing road fund objectives to achievementsor changes between the start of the road fundand the situation a few years later. No evaluation,however, compares a road fund with a controlcase where the budget finances road maintenanceexpenses. Studies reviewed included Balcerac deRichecour and Heggie for ten African countries(1995), Gwilliam and Kumar for seven African48

ROAD MAINTENANCE, INSTITUTIONAL DEVELOPMENT, AND ENVIRONMENTAL PROTECTIONcountries (2003), Zietlow for six Latin Americancountries (2004), and an internal report for twoAfrican and two Asian countries in 2005.The outcome of Transport Sector Board projectobjectives concerning maintenance remains disappointing,with only 25 of 47 objectives (53 percent)rated as moderately satisfactory or better.However, there is a 5 percent improvement duringthe period fiscal 2001–06 over fiscal 1995–2000.Often the overall project is rated higher becausethe better outcomes of the other development objectivesmask the shortcomings in maintenance.The real concern is with the sustainability of theseprojects. In the Africa Region in particular, sustainabilityis rated as likely in less than 62 percentof cases. In several projects caveats are attachedto the assessment, to the effect that the projectwill be sustainable only if sufficient funds are allocatedfor maintenance in the future.Although the introduction of road funds in somecountries may have improved the likelihood ofsustainability, there are other countries wherethis will not happen because of economic or politicalinstability. This risk is sometimes mentionedin ICRs (for example in Niger, Sierra Leone, andTogo), but often it is impossible to predict whenand where future civil disturbances will occur.This means that the sustainability information isalmost certainly not as robust as it first appears.Another clue to this overreporting is found inthe appraisal reports of active follow-on projects,where system sustainability tends to be less enthusiasticallyportrayed than in the ICRs of completedprojects. Individual conversations betweenBank engineers and IEG staff also elicited agloomier prognosis of sustainability. With thebenefit of hindsight and judging from PPAR assessments,it is evident that between 4 percent and5 percent of projects rated “likely” at the time ofcompletion would now be rated “unlikely”; the difficultyis predicting which ones will fail.A European Commission evaluation observedthat ensuring adequate maintenance of the roadnetworks in developing countries is still workin progress because most road funds do notyet collect sufficient revenues,and insufficientcapacity in domestic constructionindustries is acontinuing problem. Performancecontracting, however,as indicated in theprevious chapter, is an unambiguoussuccess story.Experience with Financing MaintenanceKey lessons from IEG’s study of road funds are thatthis approach will only be successful if there is governmentcommitment to off-budget financing ofmaintenance and to commercially oriented reformsof road management. A road fund shouldnot be contemplated if there is a high level of corruptionand little likelihood of having independentaudits and transparent procurement. Thefinancing of road maintenance should be viewedin the broader context of road management,which means that monitoring and evaluationshould start with credible assessments of road condition,past trends in the allocation for road maintenance,and the efficiency of road maintenanceoperations. Private sector participation on roadboards has also proved to be an effective way toimprove transparency and accountability in the useof road maintenance funds.Projects with objectivesrelated to maintenancehave been less successfulthan expected becausemany road funds haveinsufficient income.Developing countrieshave the most to gainfrom the use of roadfunds.The European Conferenceof Ministers of Transportdiscussed additional lessons,such as the role of theprocess in ensuring stabilityand security of the fundingflow, and noted the improved effectivenessof funds disbursed as a consequence of the possibilityof multiannual budgeting arrangements.However, European Conference of Ministers ofTransport countries for the most part have wellmanagedbudgetary processes, better-maintainedinfrastructure, and a well-established private sectorcontracting capability. Their needs are morerelated to the establishment of business-orientedroad agencies. Developing countries have themost to gain from the road fund approach, especiallythose that have a history of chronic underfundingof asset maintenance.49

A DECADE OF ACTION IN TRANSPORTBox 5.1: Performance-Based Contracting of Road Maintenance in ArgentinaFollowing promising pilot efforts in performance-based contractingof maintenance, in 1995 the Argentine Direccion Nacional deVialidad negotiated 11 3-year contracts for routine maintenanceof 3,600 km of paved roads. Building on this experience, it then developedthe Contratos de Recuperación y Mantenimiento (CREMA),assigning responsibility for rehabilitation on stretches where itwas needed, followed by maintenance of the section for 5 years.Sixty such contracts, covering 11,000 km of roads, were competitivelyawarded in 1996–97. Detailed engineering of the rehabilitationwork was to be done by the contractors, and, apart from initialstart-up payments, they were to be paid based on the state of theroads under their charge. That would be verified by monthly visualinspections.These contracts were mostly completed by the end of 2002.The share of the roads in poor condition had been reduced from41 percent to 6 percent; the higher standards of maintenance hadalso reduced the rate of road surface deterioration. Costs hadbeen kept very close to budget and were some 12 percent to 18percent lower than for comparable works using traditional contracting.The ERR on the program was about 60 percent becauseof the significant effect of the improvements on vehicle operatingcosts. Coverage of the program was recently extended througha second phase to a further 8,200 km of national roads; the sameapproach is now being applied by some of the provinces with Banksupport.Experience to date highlights several lessons:• Although the system can only yield the desired results if theflow of funds is sufficient to make timely payment to the contractors,adoption of the system—which implies commitmentsto a wide range of contractors—helps to ensure thatfunds flow and avoids their diversion to uses of lower economicpriority.• CREMA’s effectiveness depends on the availability of contractorsand road agencies experienced in contract managementand road maintenance; it also depends on the existenceof adequate management information systems covering roadcondition, maintenance needs, and costs.• It is important to avoid trying to place risks on contractors inexcess of their capacities.• Major rehabilitations are likely to require detailed engineeringin advance and contracting on more traditional lines, but incorporationof more standard rehabilitations within longertermmaintenance contracts has advantages: stimulatingcontractor innovation and ensuring more efficient distributionof expenditure on a road over time.• Moving CREMA-type contracts toward design, build, finance,and operate operations, with the private sector providing ahigher share of the investment required by the road network,depends principally on development of the local capital market.Initial hopes in Argentina along these lines proved unrealizablebecause of borrowing uncertainties and high interestrates, which led to unacceptably high bids.Sources: World Bank (2005b), Zeitlow (2004), discussions with Bank staff.There is merit insupporting moregovernment-donorassessments of roadnetwork needs.The approach to roadmaintenance continues toevolve. Originally, manyroad authorities used inhouseforce account unitsto perform maintenancework. This was a very expensiveway of carryingout this activity, because the real costs were hiddenin the departments’ often complex accountingand reporting structures. Over time this beganto give way to more efficient method-based contracting,whereby a bid system was used to selectcontractors through tenders for specified work.The system also helped to develop local contractingindustries.In the past decade, however, several countrieshave moved beyond this level to performancebasedcontracting, which involves explicitly linkingpayments for the management and maintenanceof road assets to certain clearly defined minimumperformance indicators. This has proved successfulin some transition countries, such as Estonia,and in middle-income countries, such asArgentina (box 5.1), Brazil, South Africa, andUruguay. It may be, however, inappropriate forcountries at an earlier stage of development,50

ROAD MAINTENANCE, INSTITUTIONAL DEVELOPMENT, AND ENVIRONMENTAL PROTECTIONwhere government capacity and the contractingindustry are relatively weak and the supportinglegal framework is less well defined.Over the years the Bank’s approach has becomemore flexible regarding the standards and technologynecessary to achieve road condition sustainabilityin differing circumstances. In somecountries with hilly terrain, the rate of gravel losscan be dramatic and low-cost paved roads haveworked. In others there has been more focus onturning seasonal roads into all-weather roads byconcentrating on bridges and drainage. Withoutmaintenance, gravel roads can deteriorate in 2–3years in some climates. The Bank has usually resistedfinancing routine maintenance costs.However, there are examples of upgrading projectslinked to a covenant that the governmentmust set aside funds for routine maintenance foran agreed time period (Lesotho). In one sense,the Bank indirectly finances at least some routinemaintenance whenever it agrees to fund the rehabilitationof a road earlier than would havebeen the case had the road been properly maintained.IEG believes there may also be some meritin pursuing a greater number of coordinated initiativeswith other financial institutions with jointgovernment-donor assessments of network needs,including maintenance (appendix B).An indirect effect of poor capacity experienced inseveral countries, especially in Africa, is excessiveroad damage caused by overloaded vehicles.The knowledge exists to control truck overloading;the main impediment to enforcement of axleload regulations is usually the limited capacity ofthe traffic police. Because the damage caused byoverloading rises exponentially with each additionalton of overload, the damage to the roadscan be enormous. Consequently, this is an areawhere further investigation by sector staff couldeasily be justified.Vehicle overloading is aparticular problem onAfrican roads in part dueto lack of enforcement.Two options are possible—either stronger pavements,where enforcement is unlikely to improvein the short to medium term, or greater assistancewith the improvement of vehicle testing and overloadcontrol. However, this is oversimplified becausethere are numerousother factors that alsoneed to be taken intoaccount, including regulations,accuracy of weighingequipment, avoidanceof corruption, and appropriate fines (Lauridsen andothers 1994). According to IEG’s analysis, successin this area is limited in developing countries.More attention needs to be paid in future strategies—takinginto account local administrative capability—tocustomizing an appropriate balancebetween highway construction standards andenforcement of overloading to minimize overalltotal costs.The Importance of Good GovernanceThe Bank views good governance, and thereforeanticorruption activities, as central to its povertyreductionmission. Consequently, it focuses onensuring organizational integrity, preventing corruptionin Bank-funded projects, and helpingcountries to improve their governance and controlcorruption. In February 2006, the leaders ofthe major multilateral development banks reachedconsensus on the broad policies and practicesnecessary to address corruption. 6Corruption negatively impacts infrastructure projects(including transport) through higher costs,but evidence based on contract awards can behard to find and even harder to prove. Majordifferences between expectedand actual costs,for example, were thefoundation of a 1998 reporton the status of corruptionin Tanzania thatresulted in the subsequent arrests of those implicated.Although the case was in the High Courtfor more than 3 years, the alleged corruption wasimpossible to prove because cost increases can beattributed to so many different factors.Evidence of corruption ininfrastructure projectscan be hard to find andharder to prove.Completion reports in the transport sector sometimesrefer only obliquely to potential malpractice,because there is always the possibility thatthe client has failed to understand Bank procedures.In the rehabilitation and upgrading of Aden51

A DECADE OF ACTION IN TRANSPORTAirport, for instance, there was a delay of more thana year because the Bank insisted that the contractbe awarded to the lowest technically sound tender,whereas the tender board wished to make adifferent choice from among the remaining bidders.A similar experience was recorded for urbanroads in Burkina Faso.However, other cases are more straightforward.In the Northern Uganda Reconstruction Projectregular Bank supervision uncovered irregularitiesthat led to further audits and ultimately to arequest for a government investigation. Eventuallya project manager was indicted by the Ugandanjudicial system. The ICR for a Kenyan urbantransport project describes how suspicion of corruption7 led to a forensic audit that found significantcontrol weaknesses in the project as well asmultiple indicators of fraud and corruption. Thisled to the suspension of the project and the dismissalof the Bank task team leader.Anticorruptionmodels must becustomized.The stronger focus on theneed to root out corruptionhas, according to IEG stakeholderfeedback, heightenedunderstanding by Bank staff and borrowers as towhat constitutes corruption. This greater awarenesshas led to ideas of how corrupt practicescan be identified. In October 2005 the TransportAnchor sponsored a workshop that included increasingthe participants’ knowledge of improvinggovernance in PPP highway concessions. Italso organized an infrastructure governance roundtablein March 2006; during this event a numberof countries shared their experiences in identifyinggovernance issues and in building institutionsThe Bank needs to helpits clients achieve a newlevel of governance andinstitutional capacity,but this requires amultisector approachand an evaluativeframework.and processes for good governance.The WBI has alsobeen active in sensitizingsenior government staff togovernance issues.Regions are now taking practicalsteps to combat corruption.The Europe andCentral Asia Region has developedsome diagnostic anticorruptiontools, while the Trade and TransportFacilitation Program in southeast Europe introducedmeasures and equipment to reduce smugglingand corruption at border crossings. TheEast Asia and Pacific transport team recently developedan anticorruption framework based onits experience in the Indonesian road sector; theframework was presented to and discussed bythe Transport Sector Board.Corruption issues are often unique to individualcountries, and although sharing experiencesamong countries and Regions will be useful, asingle model will not suffice. Building ownershipwithin countries and gaining high-level politicalcommitment could be the way to achieve moresuccess, but at this stage no evaluative evidencein support of this strategy is available. Nevertheless,new initiatives have commenced in Cambodia,the Philippines, and Vietnam.Good governance is not just about reducing corruption;it is the whole process by which governmentsare held accountable. It also covers thecapacity of governments to manage their resourcesefficiently, including the ability to formulate,implement, and enforce sound policiesand regulations. Steps to improve governancemay be pursued in many different ways, such asthrough the accountability of professional institutions;the introduction of market-related salaries;and greater transparency, including budgetarydisclosure, open meetings, and freedom of themedia. Similarly, the introduction of improved financialmanagement and procurement systemsshould assist. At this stage, however, there is noframework for evaluating the relative merit ofthese measures, which are still largely works inprogress.An IMF paper (Kaufmann 2005) argues that it issometimes possible to quickly and significantlyimprove a state of governance, citing Bosnia,Ghana, and Sierra Leone as examples. However,governance shortcomings in some countries areentrenched, and it would be naïve to think thatgovernance will not continue to be a problem. Continuedvigilance will be essential.52

ROAD MAINTENANCE, INSTITUTIONAL DEVELOPMENT, AND ENVIRONMENTAL PROTECTIONBuilding CapacityA previous IEG evaluation of capacity building(IEG 2005a) observed that the international developmentcommunity, including the Bank, hastraditionally treated public sector capacity buildingas a collateral objective—as a byproduct or instrumentalmeasure to advance near-term projectoutcomes—rather than as a goal in its own right.As a result, capacity building is not a well-definedarea of development practice that has an establishedbody of knowledge about what works inmeeting different needs under different countryand sector conditions. However, it should at leastencompass the three elements of institutionaldevelopment, regulatory reform, and training.In the transport sector, technical assistance has frequentlybeen used merely to fill skills gaps tomanage Bank-funded projects, sometimes withlimited lasting impact on strengthening client capacity(Bangladesh, Dominica, and Lesotho—seebox 6.4). In general, technical assistance has beenmost effective when used for discrete and welldefinedtasks and in the context of a comprehensivestrategy (Ethiopia, Ghana, and Nicaragua).Some projects reviewed supported only generaltraining of individuals. While such projects havefrequently achieved set targets, as in Albania andChina, there has been little subsequent assessmentof the effectiveness of this training or determinationof whether the organization retainedthe staff concerned. Evidence from other projectassessments after intervention (Russian Federationand the Republic of Yemen) suggests there maybe a high turnover of such staff. A further downsideis that there is seldom synchronization betweenthe timing of the training intervention andthe necessary organizational changes needed toimprove public sector performance.Some positive results, however, are also evident,such as the establishment of 25 provincial road institutesin Peru. Results for urban transport developmentprojects with institutional objectiveshave also generally been more successful andoften sustainable, as in the decentralization reformsin Brazil. In Lao PDR a proliferation offragmented project implementation units wasdismantled, and responsibility for implementationshifted to the government, thus ensuring that capacitywas strengthened in the appropriate lineministry. Other measures were added to ensurethat a devolution of responsibilities was then extendedto the provincial departments. IEG ratedthe outcome of this project as highly satisfactory.Supporting Institutional DevelopmentOf 251 closed Transport Sector Board projectswith institutional objectives, 62 percent had amoderately satisfactory or better outcome. Thetransport sector, with its strong engineering cadre,is particularly good at resolving technical issuesand introducing management systems. But institutionalobjectives cover a broad spectrum, rangingfrom organizational and regulatory reform totraining and technical studies. For the sector as awhole, institutional development outcome resultsvaried by topic (seetable 5.1). Technical issueswere satisfactory in85 percent of cases; planningobjectives achieveda success rate of 78 percent. Other scores were:studies/safety, 68 percent; management capacitybuilding, 61 percent; environmental matters, 64percent; organizational restructuring and regulatorychange, 63 percent; training, 52 percent; andmonitoring and evaluation, an unsatisfactory 38percent.A problem reported in several projects, includingCape Verde, Indonesia, Lesotho, the Russian Federation,and Turkmenistan, was lack of realism onboth sides about the rate at which change couldbe accomplished. It was often much slower thanenvisaged at appraisal, sometimes leading to severalextensions before projects could be closed.Areas where the transport sector could improveits performance in institutional development areas follows: First, make a more rigorous assessmentof the institutions’existing capability andwillingness to change;second, ensure that theregulatory framework canThe Bank’s support toinstitutional developmenthas had mixed success.Institutional change takestime, and the Bank needsto be realistic about this.53

A DECADE OF ACTION IN TRANSPORTTable 5.1: Analysis of Performance by Institutional Development Objectives,Transport Sector Board Projects, Fiscal 1995–2006Objectives rated moderatelyNo. ofsatisfactory or betterobjectivesSubobjective rated by IEG Number PercentManagement capacity building 64 39 61Environmental management 22 14 64Monitoring and evaluation 8 3 38Maintenance 47 25 53Training 21 11 52Planning 18 14 78Technical issues 20 17 85Studies and safety 19 13 68Restructuring, decentralization, and regulation 32 20 63All institutional development 251 156 62Source: World Bank data.support the changes proposed; and third, look foropportunities to make such interventions sustainablebeyond the horizon of the immediateproject through a more programmatic approach.Continuity of engagement is also important.In some instances (such as Indian Railways orTanzanian roads) the Bank has withdrawn whenfaced with little or no apparent progress with reformissues. But in time new factors have comeinto play and the situation has changed. The Bankcan only hope to influence a new direction if itstays involved.Protecting the EnvironmentAn IEG evaluation of environmental sustainabilityin development noted that many developingcountries view international concern over environmentalproblems in their countries as intrusiveand likely to impede development. They arguethat developed countries have overexploited theenvironment, refused to take full responsibility formitigation of their own impacts, and want to shiftthat responsibility to developing countries withoutadequate compensation. This perception hassubstantial validity and has complicated the roleof the Bank. At the same time, public tolerance forinadequate compliance by the Bank of its ownpolicies is low. The transport sector has hadheightened awareness of environmental issuessince the well-publicized Brazilian Polonoroesteprogram in the 1980s, when upgrading the BR-364highway led to an explosion of uncontrolled deforestationspeculation in the absence of effectiveenvironmental controls.During the review period the transport sector hasperformed reasonably well in most projects withenvironmental objectives. But while the sectorreceived a 94 percent score from QAG on Qualityat Entry for the quality of environmental managementplanning and for assessment of environmentalrisks (based on 53 projects), the IEGoutcome results for environmental objectives areless positive. Fourteen of 22 closed Transport SectorBoard projects with environmental objectives(64 percent) returned a moderately satisfactory orbetter outcome. Several were involved with establishinga local environmental capability, includingsetting up environmental units and trainingin diverse areas such as environmental protectionactivities and handling resettlement and compensationissues. Special attention in some projectswas on reducing negative environmental impactssuch as noise and air pollution (box 5.2).The majority of transport projects with environmentalobjectives in the past decade have been54

ROAD MAINTENANCE, INSTITUTIONAL DEVELOPMENT, AND ENVIRONMENTAL PROTECTIONBox 5.2: Lessons on Reducing Urban PollutionIssues such as air pollution have gained importance in recentyears. In Dhaka, highly polluting three-wheeled taxis with two-strokeengines were removed under the Bank’s Air Quality ManagementProject. This made a significant difference to air pollution. However,the recommended social measures to alleviate the adverseimpacts on the livelihood of affected drivers were disregarded.Special measures to cope with two-wheeled traffic are alsoneeded in many South Asian countries such as Thailand and Vietnam.An important Bank publication on the air pollution issue, ReducingAir Pollution from Urban Transport (World Bank 2004a),provides a practical framework of guidelines and principles on howto select appropriate policies and take mitigation measures againstthe worsening poor urban air quality. WHO has estimated that650,000 people died prematurely from urban air pollution in developingcountries in 2000. But Bank involvement is still small and arguablyshould be greater, especially in Asian cities.The adverse effects of air pollution often fall disproportionatelyon the poor, compounding other environmental problems such aslack of clean water and sanitation. Energy savings are also underthe spotlight; in Brazil more than a third of the country’s cars runon either pure ethanol or gasoline-ethanol blends. Natural gas topower public transportation is becoming more common, and manycities have programs to eliminate leaded gasoline.Source: World Bank (2004a).classified as category B or C. Category A projectsare likely to have significant adverse impacts thatare sensitive, diverse, or unprecedented. CategoryB projects can have potentially adverse environmentalimpacts on human populations orenvironmentally important areas—including wetlands,forests, grasslands, and other natural habitats.Category C projects are likely to have minimalor no adverse environmental impacts.An example of recent progress is the Chinese FujianProvincial Highway. In this project a full environmentalassessment was carried out and theenvironmental management plan covenanted inthe loan agreement. The provincial road authorityestablished a new environmental unit andworked closely with Bank staff, whose supervisionteam (including two environmental specialists)was also diligent in following up on the implementationof the environmental mitigation actions.The monitoring program and outcome werecomparable with industrial country standards.But there is room for improvement in this area. Theenvironmental impacts of infrastructure projectshave long-term implications (often 50–100 years),while national plans usually look forward 20 yearsor so, and project appraisals typically have a 5- to15-year horizon. A concern is that once projectsare completed, Bank supervision (including environmentalsupervision)ceases. Resources availablefor fully incorporating environmentalconcerns intoproject design and evaluationare constrained.There is a need to look “beyond the fence” to whatthe IFC characterizes as the area of impact. Intransport this would be the longer-term impactson expanded land use; the deforestation of ruralareas; and impacts, especially in the cities, of increasingmotorization such as traffic congestioncausing increased air pollution, noise, and trafficaccidents. IFC is able to gofurther than IDA and IBRDwith its environmental surveillance,continuing itsoversight until the loan isfully paid off or the equityis sold.Transport projects withenvironmental objectiveshave performedreasonably well.Increasing motorization,traffic congestion, andexpanding land use willcontinue to requireconcerted attention.Only six Bank projects related to the urban environmentand air quality in 10 years have beencompleted and evaluated. One of these was theTransport Air Quality Management Project for theMexico City metropolitan area. The project, whichhad a satisfactory outcome and was assessed by IEGin a PPAR, led to a significant decrease in ambientconcentrations of pollutants and resulted in fewer55

A DECADE OF ACTION IN TRANSPORTrespiratory illnesses and other acute syndromes ofpoor quality air. More of these projects are needed.More projects toencourage energysavings and clean airare needed.Urban planning programs thatintegrate public transport, landuse, and air quality strategieshave been promoted for manyyears. Curitiba, Brazil, and Bogota,Colombia, where people’smobility has been supported through use of privatevehicles, have long been recognized as instructivemodels for urban planners, but suchachievements resulted from exceptionally strongleadership. The Bank has shown that extendingand modernizing commuter rail systems and buscorridors is an effective way to alleviate heavyurban traffic congestion (Brazil). Attention is alsoincreasingly being given to the installation of centralizedtraffic management systems (Bangladeshand Vietnam) to regulate traffic flows as efficientlyas possible. Parking strategies can also improvetraffic flow, generate revenue, and discourage carusage. In a few cities special arrangements havebeen made for nonmotorized transport (in Bangladeshand the Philippines).Whether and how transport can influence behavioralchange in established industries and byconsumers to meaningfully address climatechange trends remains an open question. Giventhe expected growth in the vehicle population, thedemand for road space by private vehicles will inevitablyhave to be constrained through pricingmechanisms and physical restrictions.Several solutions are already technically possible,but the extent to which measures that constrainvehicular use will be supported politicallyis uncertain, given their likely unpopularity withthe public. Europe appears to be moving in theright direction. This is a long-term problem towhich the Bank will need to devote more seriousattention and even advocacy. Currently, theretends to be more focus on safeguard issues upfront in project design; that avoids doing immediateand visible harm but is arguably weaker onaddressing longer-term policy and incentives tobring about substantial impacts. Issues such as thiswill need to be vigorously addressed in a synergisticway by the newly integrated Infrastructureand ESSD Network.56

Chapter 6: Evaluation Highlights• Both urban and rural poverty can be reduced when transportimproves accessibility and affordability for the poor.• The distributional impact of transport projects is underresearched.• Regardless of who implements the project (communities or worksdepartments), sustainability remains a major issue.• Pro-poor passenger transport pricing needs more attention foraccessible transport to reach the poorest.• In fragile states the risks of intervention are high, but the returns cansometimes be substantial.• Where there is low institutional capacity, Bank staff tend to underestimatethe time needed to implement reforms, build capacity, andbuild institutions.

6Transport and PovertyThis review began by showing the importance of transport in achievingpoverty reduction and its potential contribution to the MDGs. Transporteffects on poverty reduction are largely indirect and not easily quantified.The connection between transport and poverty reduction is that whentransport improves accessibility for the poor, it unlocks employment opportunitiesin construction and other areas, and more importantly enables essentialtrips to service centers, health and educational facilities, and markets.In this chapter the experiences and lessons emanatingfrom transport projects designed to reducepoverty are discussed, first in the ruralcontext and then in the cities, where accessibilityand affordability are also crucial issues. Finally,Africa is given special attention, because the Bank’spoverty-reduction agenda in recent years has puta spotlight on this continent. Africa has a greatershare of fragile states than any other Region, notonly because of its demographics and geography,but also because of weak governance and politicalinstability.Rural Transport and PovertyThe causes of rural poverty are complex and multidimensional.They include issues regarding culture,gender, climate, markets, and public policy.Rural poverty accounts for nearly 63 percent ofpoverty worldwide, reaching 90 percent in somecountries, such as Bangladesh, and between 65and 90 percent in Sub-Saharan Africa (Khan 2001).The ways in which policies affect the rural poorare through markets, transfers (both public andprivate), and both services and infrastructure.Transport falls in the latter category; roads are normallyprovided through public funding and the vehiclesby both the public and private sectors.Nonmotorized transport in a wide variety of formsplays an important role in many countries.Most rural roadprojects focus onaccess, and many uselabor-intensiveconstruction.Although some of the Bank’smain intercity highway projects(especially in China) also includedistrict and even localroad components, most ruralroad projects involve basic accessroads, many using laborintensiveconstruction. A labor-intensive approachis popular with donors because it generates employment,but it also requires good technical assistancesupport and strong client commitment,which is sometimes lacking. But such roads arein high demand by the rural population and, in59

A DECADE OF ACTION IN TRANSPORTBox 6.1: Improving Road Access in Rural Lesotho and GhanaThe Lesotho Road Rehabilitation and Maintenance Project (approvedin 1996) assisted with the rehabilitation of 414 km of ruralaccess roads. An impact study found that the rural residents consideredbetter access to be of great value, a finding that was confirmedby an IEG mission. Employment during construction was alsoimportant, and most participants were able to work on these roadsfor an average of 3 months.Although the baseline data were sketchy, it is clear that the upgradedroads led to a range of small businesses being established.The affected communities also mentioned the improvedaccess to economic and social services. These positive impactsare consonant with both the Lesotho PRSP and the Lesotho Vision2020 Plan. A more rigorous follow-on pilot project has recently beencompleted in the Senqu River Valley, where village mobility mapshave been created (Lesotho Ministry of Public Works and Transportand World Bank 2005). This will give important information aboutthe impact on poverty and gender.A similar study in Ghana analyzed travel patterns of villagersby mode. It showed that the majority of trips were by nonmotorizedmeans, including on foot, but that motorized trips were morelikely to be made for trips to markets or health centers. Gender isimportant in these analyses because rural access improvementsmay be particularly beneficial to women and children.Source: World Bank (2006b).Lesotho, for example, have recorded positive impacts(box 6.1).Typically, some of these roads are constructedunder the district works department and in theBank fall under the Transport Sector Board, whileothers are part of community-driven or social fundprojects. In the latter case they may be a componentof a package of infrastructure improvementsranging from water and sanitation to new communitycenters. Community projects within theBank fall under sector boards other than transport.The works-managed projects, where appropriatetechnical staff were used, were generally moresuccessful than the community projects, with 26of 36 (72 percent) rated satisfactory. The mainreasons given for the less satisfactory performancein the other 28 percent of cases were insufficientfinance, poor technical skills and capacity,and insufficient priority given by government.In Indonesia it was also demonstrated that largestructures built using labor-intensive methodsProjects have generallyperformed better whenconstruction is managedby the district worksdepartment.could cost about one-thirdless than equivalent worksconstructed through governmentagencies. In thePhilippines it was proventhat small infrastructureworks such as foot trails,spillways, and hanging bridges could benefit largenumbers of people (37,000 households in thiscase). Improvements of farm-to-market roads inIndia (Assam) showed that cropping intensity improvedby as much as 45 percent, which led to asubstantial increase in employment. Another studyin India indicated that expenditure on roads hadby far the largest impact in reducing rural poverty.For every $22,000 invested in rural roads, 163 peoplewere lifted out of poverty (Fan, Hazell, and Thorat2000).Although the contribution of transport operationsto poverty reduction is generally indirect,most direct poverty-targeted interventions suchas schools, clinics, nutrition programs, and evencredit extension depend on transport in oneway or another. The distributional impacts oftransport projects and their effects on povertyare relatively underresearched and are oftenanecdotal rather than results-based, but there isevidence that village road improvements significantlyaffect school enrollment and attendance.According to studies by WHO, between 40 percentand 60 percent of people living in developingcountries live more than 8 km from health carefacilities; in rural areas this distance can be evengreater, and this is especially problematic in thecase of accessing maternal and child care (WHO2005).60

TRANSPORT AND POVERTYRecent work in Bangladesh using household-levelpanel data confirms the importance of rural accessand suggests that road investments are propoor,meaning the gains are proportionatelyhigher for the poor than the nonpoor (WorldBank 2006c). Bank research in Morocco showedthat investments in new roads had gender implications;safer roads encouraged parents to sendtheir daughters to school, thus increasing femaleprimary school enrolment. In Bhutan the traveltime involved in getting to and from school wassubstantially reduced, and in one village school attendanceincreased eightfold.Bank community-based projects often involvemuch deeper engagement with the local people,but the difficulty in assessing the effectiveness ofsuch projects is that they frequently fall under sectorboards other than transport. The evaluationrating (59 percent moderately satisfactory or better)reflects the entire project in which the transportcomponent may be a fairly small part. Typicalreasons for failure are, however, very similar toworks-managed projects because sustainabilityis less assured.In Moldova the road component was poorly targetedat reaching the poor, and in Lebanon constructiongoals were not met because of difficultiesin getting landowner agreement and because ofissues related to maintenance responsibility. Arecent QAG assessment of the quality of transportcomponents under other sector boards confirmedIEG’s findings that in multisector projects thequality of preparation for technical and sustainabilityissues is subsumed by community participationissues. QAG looked at the Quality at Entryof 16 projects and found that only 25 percentwere satisfactory. As it is not cost effective to havea transport team member on all such projects,QAG’s proposal that the Transport Sector Boarddraw up guidelines for handling future transportcomponents in multisector projects is a sensiblesuggestion.Sometimes a major leap forward in poverty reductioncan be achieved by going beyond the“grassroots” village project. The opening of significantareas of rural potential may depend on alarge-scale transport investment.In such cases a majorinfrastructure project canmake a huge difference topoverty reduction; the JamunaRiver Bridge in Bangladeshis a fine example of a multifunctionalstructure that led to improved income for a significantnumber of people (box 6.2).Urban Transport and PovertyMuch of the growth in the world’s populationfor the foreseeable future will take place in thecities and towns of the developing world. In 2000the world’s urban population in developing countrycities was 2.1 billion; it is expected to reach atleast 2.9 billion by 2015. Cities in developingcountries with a population exceeding 1 millionnumbered 268 in 2000, but by 2015 the figure ispredicted to rise to 358 (World Bank 2001; UNHabitat 2001).Over the next 20 years, many countries will for thefirst time become more urban than rural. In partat least, urban poverty is created by the efforts ofthe rural poor to escape thepoverty trap by moving tothe cities, where they perceivethat better opportunitiesexist. Although thebenefits that urbanizationbrings cannot be overlooked, the speed and scaleof this transformation presents many challenges.Urban transport projects cover construction orrehabilitation of urban roads, bridges, and interchanges;improvements to traffic managementand systems; and (in a few cases) support tosuburban rail transport and renewal of bus andtrolley-bus fleets. Performance indicators have includedincreased passengerand fleet capacity, reducedtravel and waiting times, andimproved passenger comfortand safety.Bank emphasis has oftenbeen on encouraging thedesign of urban transportprojects to improve theThe distributiveimpact of transportprojects is relativelyunderresearched.Community-basedprojects often fall shorton sustainability.Large-scaleinvestments that canopen significant areasof rural potential canhave substantialimpacts on povertyreduction.61

A DECADE OF ACTION IN TRANSPORTBox 6.2: Bangabhandu Jamuna River Bridge, Bangladesh—How Transport Infrastructure CanStimulate DevelopmentThis project aimed to establish an efficient and reliable multimodaltransport link across the Jamuna River to connect Bangladesh’sless-developed northwestern region with its more developed easternregion. The intention was to accelerate economic growth inthe northwest and to integrate the area more fully into the economyof the nation.The bridge, which is nearly 5 km long, carries a four-lane highway,rail line, utility connections, and fiber optic cables; it wasopened in June 1998. This structure, which cost $962 million,was financed by the government of Bangladesh with the supportof several international financial institutions, including the WorldBank, the Asian Development Bank (ADB), and the Japan Bank ofInternational Cooperation. The rail component financed mainly byADB added value by including improvements to the rail system, suchas connecting two different rail gauges, constructing 99 km ofnew connecting track, and assisting with institutional reforms inthe Bangladesh Railway Company.Before the bridge was constructed the only connection was aslow-moving ferry; traffic jams at the ferry terminals often lastedfor several days. The completed project has reduced journey timesand transport operating costs and has stimulated interregionaltrade. Computer simulations have predicted major shifts of personsout of abject poverty locally with wider distributional improvementsto both local and national welfare.IEG rated the project outcome as highly satisfactory. The physicalworks were completed without major implementation delays,the quality of construction met international standards, and the environmentaland resettlement plans were largely successfully accomplished.Even though the road was tolled, the level of traffichas been 41 percent higher than expected.Sources: IEG (2000), ADB (2005), Luppino and others (2004).Urban growthpredictions arespectacular; theconcern is whethertransport investmentscan keep up.integration between servicesand to increase the access ofurban poor to employmentcenters, health centers, andeducational facilities (table 6.1).A new contingent of policymakers is assuming the diverseresponsibilities of urban governance—asmany national governmentsdecentralize and devolve their functions;and programs in poverty, health, education, andpublic services are increasingly being placed in thehands of hitherto untested municipal and regionalgovernments.Many of the Latin American urban transport projectsbased on urban railway restructuring or publictransport reform have been de facto instrumentsThe Bank’s emphasisin urban transporthas often been on theintegration ofservices to increaseaccess for the poor.to catalyze broader institutionalreform, such as the creation ofmetropolitan authorities, modalcoordination, resource generationfor the development ofactivity poles, and the privateconcessions of operations. Insome Brazilian cities improvementsin access to metro stations through introducingconnecting minibus services lines with subsidizedfares have proved successful. However,poor people often live too far away from these publictransport corridors to benefit from such projects.This is also an international problem becausethe urban poor, whether in Moscow, Paris, or Johannesburg,tend to live on the city peripherieswhere land is cheaper, but where travel distancesare longer, more costly, and less convenient.Some of the early projects that included componentson bus deregulation and privatization provedunsustainable (Sri Lanka), and in recent years theBank has resisted bus replacement, unless accompaniedby significant regulatory reforms toachieve longer-term sustainability (for example, inUzbekistan and Kyrgz Republic)—a strategy validatedby project performance. Moreover, the Bankhas discouraged metro and light rail constructionworldwide (with a few exceptions) in favor of morecost-effective solutions such as buses, bus prioritymeasures, and exclusive busways. It has, however,supported improving the capacity (Korea) or connectivity(Brazil) of existing metros. Competitivecontracting has also been actively encouraged.62

TRANSPORT AND POVERTYPro-poor fare pricing with targeted subsidies,such as the vale transporte, has been successfullypromoted in Brazil, where it is an important socialsafety net (this subsidy is a compulsory requirementfor employers; through this theyfinance part of the commuting costs of their employees).Without the vale transporte, millions offormally employed users earning $300 per monthor less would have trouble paying their fares.However, the vale transporte does miss the poorestpeople, and a future challenge is how to extendits benefits to the informal employmentsector. Decisions on appropriate fare structuresalso have to be taken in the context of trading offcheaper fares and poorer services; in the KyrgyzRepublic it was demonstrated that the poor maysometimes be willing to pay more for better service.The Bank staff has solid guidance for dealingwith the various pricing techniques from Citieson the Move (2002a) and other publications.In a 2003 IEG evaluation summary of urban transport1 30 Bank interventions in urban transportover the preceding 20 years were reviewed; 87 percentwere found to have had satisfactory outcomes.The reestimated average ERR was foundto be 30 percent, compared with 43 percent at appraisal.These results are slightly higher thanthose covered by the review period of this study(1995–2005), whereby 30 of 40 (75 percent) hada moderately satisfactory or better outcome.However, inspection of the objectives shows thatlater projects have had more institutional content.In terms of upgrading physical infrastructure,most projects achieved or even surpassed theirphysical objectives, while traffic management programswere more successful in countries thathave the ability to enforce traffic regulations, suchas Brazil and Korea. Projects that tried to bringabout better integrated development, such as inBelo Horionte and Recife, sometimes took longerthan expected to implement because of exogenousfactors (Brazil imposed severe fiscal constraintsafter 2002 following the macroeconomicupheaval in Argentina). Sustainability was consideredlikely, however, in more than two-thirdsof all urban transport projects assessed.Although a few projects havetackled the issue of integratingnonmotorized traffic andpedestrians in motorizedcities, this can be a difficultchallenge because the incumbentprofessionals haveoften been trained in Western countries or followdeveloped country philosophies toward thecontrol of transport in developing cities. Sometimesa change in locally accepted notions ofappropriate city planning is warranted (Tiwari2002). Nonmotorized transport projects arestill comparatively rare, given the huge numbersof nonmotorized transport users. Currentestimates show, for instance, that there are 1.4 billionbicycle users worldwide, including 500 millionin China. 2Considering the current hugegrowth in developing cities(in East Asia and Pacific, 70percent of Regional economicgrowth), the number of urbantransport projects appearscomparatively low (see tableThe Bank has tendedto discourage light railand metros in favor ofmore cost-effective bustransport.Enforcement capacitywas central tosuccessful trafficmanagementprograms.Considering the rateof urban growth, theBank seems to investtoo little in urbantransport.6.1). Over the fiscal 1995–2005 period, such projectshave only accounted for between 5 percentand 8 percent of the transport portfolio and appearto be declining slightly rather than increasing,as might be expected. Chapter 7 argues thatthis is partly due to insufficient capacity and/or priorityin the Bank’s transport network and sometimesto taking on too fewlarge, complex projects thatrequire lengthy preparationtime; this important issue deservesserious attention bymanagement. Given the successfuloutcome results reported(above 75 percent), the longer preparationtime with more consultation does appear to producemore positive outcomes.African Transport and PovertyAfrica is the world’s poorest continent, and Sub-Saharan Africa is the Bank Group’s largest Regionwith the most client countries and the highest63

A DECADE OF ACTION IN TRANSPORTTable 6.1: Distribution of Urban Projects and Components, Closed and Active(1995–2005)1995–2000 2001–06 1995–2006Total number of urban projects 41 37 78Components 78 77 155Urban roads 27 24 51Traffic management and safety 10 9 19Institutional, regulatory, and planning 12 19 31Nonmotorized transport, urban poor 7 7 14Urban environment, air quality 3 3 6Public transport 19 15 34Source: World Bank data.volume of IDA lending. The UN Food and AgricultureOrganization recently warned that in 2006some 27 countries would urgently need food aid(BBC 2006). However, the Bank’s 2005 annualstudy of the continent shows that 30 percent ofAfrican states have managed to achieve a growthrate greater than 4.5 percent since the 1990s andthat the number of African conflicts has fallenfrom a peak of 16 in 2002 to 5 in 2005. An importantdevelopment has also been debt relief forthe heavily indebted poorcountries, many of which arein Africa. In several cases(Ghana, for example) the savingsin debt relief have madeavailable additional funds for poverty-reduction expenditureprograms. 3The Bank hasrecognized the need toimprove feeder roads.Sustainability is amajor issue in Africa.In the transport sector twoinitiatives are particularly relevant;first, the World BankGroup Africa Action Plan (box6.3), which provides a result-oriented frameworkto achieve clear goals (such as the MDGs), and second,the SSATP, a program specifically designed toimprove transport performance in Sub-SaharanAfrica (discussed under the section on Donor Cooperation;see box 3.1).Bank Transport Project Performance in AfricaThe Bank has recognized the need to improvefeeder roads in addition to national networks, asdemonstrated in Burkina Faso, Ethiopia, Mali, andNigeria. Ratings for completed Bank transport projectsin Africa at first appear favorable—78 percentwere assessed as having a moderately satisfactoryoutcome or better. However, only 61 percent receiveda sustainability rating of likely or better, andonly 57 percent received a substantial or better institutionaldevelopment impact rating.A closer look at outcomes also shows that one-thirdof the positive ratings were only moderately satisfactory,and in 10 projects the sustainability ratingswere categorized as nonevaluable, usuallybecause of political uncertainty or doubts about institutionalcapacity. Recently there has been somefocus on multimodal regional corridor projects toreduce bottlenecks at international borders and toharmonize customs and trade policies. These projects,though, have not yet been evaluated by IEG.However, some success is evident in the BankGroup’s increased effort with the legal and regulatoryframeworks to encourage more privatesector investment (Cameroon, Mozambique, Tanzania,and Zambia). In Cameroon, for example, theMinistry of Public Works was restructured to includeunits specifically for rural roads, and the Ministryof Transport was refocused on planning andpolicy regulation.Relatively few outcome objectives were directly focusedon poverty reduction, although indirectly64

TRANSPORT AND POVERTYBox 6.3: The World Bank Group Africa Action PlanThe Bank Group’s Africa-led action plan starkly observes thatSub-Saharan Africa continues to present the world with its mostformidable challenge. During the past two decades the number ofpoor in Africa has doubled, from 150 million to 300 million, more than40 percent of the Region’s population. It has the highest povertyincidence among all developing regions, and extreme poverty istwice the global rate. Only 34 percent of Africa’s rural populationlives within 2 km of an all-season road. Africa is also the only Regionthat remains behind on most of the MDGs.In this plan, a number of components have direct links to transport.They include closing the infrastructure gap, creating an exportpush, developing the private sector, supporting Regionalintegration, and improving governance and institutional capacity.Other issues are the extent of improvements to rural accessibility,the potential impact of reductions in freight costs, and theamount of the sector’s contribution to health issues, such as reducingthe role inadvertently played by transport in spreadingHIV/AIDS and reducing the unacceptably high road accident rate.Many of the countries in Africa are fragile states, also known aslow-income countries under stress (LICUS).These countries share a common fragility in two respects.First, state policies and institutions are weak, making them vulnerablein their capacity to deliver services, control corruption, andprovide proper accountability. Second, they face risks from warsand political instability. A problem that the Bank and others are onlybeginning to grapple with but that badly affects the transport sectoris the difficulty of retaining college-educated professionals. InSub-Saharan Africa skilled workers make up only 4 percent of thetotal workforce, and more than 40 percent of these educated peopleleave their countries in search of jobs overseas.the poor benefited through improved accessibilityand the opening up of markets. Physical upgradingwas generally satisfactory at 72 percent,and railway and port concessions have been particularlysuccessful at 82 percent. Other activitiesscored lower, with maintenance objectives scoring60 percent and road safety 50 percent. Successesincluded institutional improvements toimprove efficiency and accountability, such as theestablishment of road funds and road agencies; thephasing out of force account maintenance in favorof small contractors; and training initiatives forthese emerging enterprises. Zambia, for example,generally had positive experiences in theseareas, but it could not sustain similar efforts in roadsafety. A road safety action plan was compiled butnot implemented because of lack of capacity, andthe accident record actually worsened. Road safetycontinues to be a concern in Africa. The Bankneeds to deploy more resources in this direction.Bank Transport Sector Performance in AfricaRoad Management and MaintenanceThe Bank has had some success in moving forwardwith road management, especially in countrieswhere responsibility for this function has beenvested in road agencies. What is difficult to predict,however, is whetherthe progress that has beenachieved will be undone laterby political unrest. Setbacks inroad management caused byconflicts or governance issuesabound, including in Côte d’Ivoire, Guinea-Bissau,Liberia, Niger, Rwanda, and Zimbabwe.Despite the fact that 27 road funds have beenestablished in Sub-Saharan Africa, the efficiencyof these funds is highly variable. In only one-thirdof the cases are the funds able to cover routinemaintenance needs.Lack of CapacityA 2000 multidonor evaluation of experiences in theroad sector in Ghana concluded that the mainconstraint to more rapid improvement of the integrityof the road network was the lack of capacityin the Ministry of Roadsand Transport (appendix B).The road program was tooambitious for both the fundingcapacity of the governmentand the absorptioncapacity of the ministry. InMost transport projectswere structured toindirectly benefit thepoor.The Bank has hadsome success with assetmanagement inAfrican countries withestablished road funds.65

A DECADE OF ACTION IN TRANSPORTBox 6.4: Lesotho Road Rehabilitation Project—Limited Capacity Impedes ReformExperience from four earlier Bank-financed road projects inLesotho showed that ongoing road maintenance activities wereconstrained by a lack of sustained operational and institutionalcapacity in the implementing agencies. The Lesotho Road RehabilitationProject (approved in 1996, completed in 2003) wasthus designed not only to restore sections of the road networkthat had reverted to poor condition but also to strengthen thecapacity of the road sector agencies through policy and institutionalreforms.The outcome of the project was rated moderately satisfactory.Although some progress was made in enhancing the condition ofthe overall network, improving access to several remote communities,and developing emerging contractors, the institutional objectiveswere not fully achieved. At midterm, only 20 percent ofthe project funds had been disbursed, so $14 million of the creditwas cancelled, which meant that the upgrading program had to becut back.Institutional development impact was rated modest. An actionplan for policy reform was agreed to during preparation, but progresswas laborious. Two separate rural road agencies were successfullycombined under the Department of Rural Roads and a road fundestablished, but only about 60 percent of the required funding hasbeen provided.Sustainability was rated nonevaluable because of continueduncertainty with regard to the substance and effectiveness of thereforms. A proposal for a semiautonomous roads agency was put tothe Cabinet but rejected. A new, scaled-down proposal was thendeveloped, envisaging a Roads Directorate within Ministry of PublicWorks and Transport. It took into account the ongoing decentralizationeffort and ensured that a substantial reduction in staff would beeffected. Although the current proposal is less ambitious, it addressessome of the core deficiencies of the current arrangements and willprovide a platform for a further projects, which can provide supportduring the implementation of the new institutional arrangements.Source: World Bank (2006b).Where there is lowinstitutional capacity,Bank staff tend tounderestimate the timeneeded to make reforms,build capacity, and buildinstitutions.countries with low institutionalcapacity, operationalstaff tend to beoverly optimistic abouthow long it will take toachieve legislative and organizationalchange andto build human capacity.Bank staff and clients alikesometimes frame institutionalobjectives and milestones that are impracticalfor a typical 5-year project.This is illustrated by the very slow, incrementalprogress with institutional reform in Lesotho (box6.4). Progress with reform in this case was hinderedby weak government capacity and procrastinationon key decisions. Continuity andtiming of support, as exemplified in Burkina Fasourban development and Tanzanian railways projects,coupled with lessons learned through previousprojects, are equally important.Because the quality of capacity building is crucialin Africa, greater efforts are needed to ensurethat CASs include the specific capacity needs ofthe transport sector. There appears to be a tendencyto favor more successful countries to theneglect of weaker ones that need more help andthat have significant numbers of desperately poorpeople. Weak capacity leads to poorly maintainedinfrastructure, lack of enforcement of traffic regulations,and appalling road traffic safety records.Fragile StatesMore than half of the African countries that havemade limited progress in the transport sector arealso fragile states (formerly called low-incomecountries under stress [LICUS]) 4 and many are alsoin the lower rankings of the 2006 Corruption PerceptionsIndex. 5 Although the share of lending andtrust funds to fragile states in the Africa Region relativeto their population is higher than otherregions, IEG estimates that fragile states in theAfrica Region have the lowest number of ESW66

TRANSPORT AND POVERTYproducts per country and a lower share of theadministrative budget. ESW for transport in Africanfragile states is minimal, but this is partly explainedby the extent of work carried out under SSATP.IDA’s performance-based aid-allocation mechanismhas meant that IDA financing has been a relativelylimited source of aid to fragile states.Nevertheless, according to a 2006 IEG evaluationof fragile states (IEG 2006c), some experts believethat the potential returns from aid in suchstates can be extraordinarily high if a policy turnaroundis achieved, even though the risks of failureare also substantial. Selectivity and a clearstrategy are obviously important.Liberia is a case where the recent changes in governmenthave presented an opportunity to seeka major reversal in the economy, and the transportsector is seen by the government and the Bankas pivotal to that effort. This opportunity for fasttrackassistance should be carefully monitored.The Bank clearly can be stronger on donor coordinationin fragile states but needs to give muchmore focused attention to capacity building. Othersimilar transport-focused reconstruction projectsare active in Angola, the Democratic Republic ofCongo, and Sudan.Programmatic LendingMore programmatic lending or SWAps designedto achieve specific capacity-building objectivesmay be appropriate. Special initiatives under theumbrella of SSATP to share experiences couldalso be encouraged. A capacity-building strategyfor the transport sector in each African countrycould also be considered to help transport projectsbe more sustainable. Such a strategy couldhelp to inform and guide the efforts of the countryprograms and should include the SSATP, theWBI (with one-third of its initiatives in the AfricaRegion), and the African Capacity Building Foundation,6 which has not yet found an effective wayto link the ad hoc programs it funds to individualcountry needs.HIV/AIDSHIV/AIDS has severe demographic, economic,and social impacts that run counter to poverty reductionefforts and the transport sector is a majorvector for the disease. Long-haul truck drivers arethe highest risk group in the road sector (WorldBank 2004c). HIV/AIDS prevention componentshave been included in some of the more recentactive transport projectsin Africa. Moreover, anHIV/AIDS framework hasbeen developed for thesector and draft standardclauses for works contractsdrawn up.HIV/AIDS preventioninitiatives show promisebut will need systematicevaluation uponcompletion.An innovative HIV/AIDS Abidjan-Lagos TransportCorridor Project was entirely designed aroundusing corridor transport as a means to provide activeawareness, prevention, and treatment servicesto corridor users, truck drivers, and bordercommunities. In Ethiopia, a country with one ofthe highest number of people infected by HIV/AIDS in Africa, the Bank, together with theEthiopian Roads Authority, has launched a comprehensiveHIV/AIDS strategy for the roads sectorwith three components: (i) information, education,and communication; (ii) care and support; and(iii) capacity building and policy development.As baseline studies are carried out, it will be possibleto gauge the outcome of this initiative. So farthis undertaking looks promising, but it is stilltoo early to assess the overall impact.67

Chapter 7: Evaluation Highlights• Results measurement, monitoring, and evaluation all need to beimproved.• The transport sector is now handling nearly twice the volume of commitmentswith fewer staff than it did in fiscal 2000.• Staff resources need to be redeployed and strengthened.• There appears to have been a partial avoidance of projects thatrequire longer and more costly preparation.

7Internal BankPerformance FactorsIn November 2004, QAG completed an analysis of the transport portfoliofor 26 of 44 projects based on Quality at Entry. 1 The analysis found relativelyfew significant differences for the major dimensions between overalltransport sector performance and the Bank average.Project PreparationOn the positive side, the transport sector did wellon implementation arrangements, Bank processes,risk assessment, environmental aspects, economicjustification, and arrangements for poverty and socialmitigation. This undoubtedly reflects the trainingof the engineers and transport specialists,many of whom are experienced project managers.In general, lessons learned extracted from IEGreviews of ICRs concur with these results. On thenegative side, the transport sector was less successfulthan the Bank average at clearly definingdevelopment objectives for assessing the extentof client ownership and political willingness tocarry out reforms, and in arguing the project conceptbased on lessons of experience.For this review IEG added the results for the latestround of QAG Quality at Entry assessments(nine new projects). Overall, there was only a1 percentage point change, which was not significant.However, the analysis also shows thatimprovements have occurred in partnering withdonors, realism of financial planning, and attentionto gender issues. But the quality of Bankdocuments, such as appraisal reports and legaldocuments, has gone down slightly.Another aspect of project preparation is theamount of conditionality in lending documents.The Bank’s use of such conditions has declinedsharply over the past decade because there hasbeen a stronger focus on country ownership ofreforms. The use of conditions in the transportsector appears to be aboveaverage, but this may bedue to less AAA work beingcarried out in the sectorcompared with other sectors.Such advisory workprovides an effective wayto reach agreement withGood performanceon supervision isattributable to transportstaff knowledge andexperience.clients through policy dialogue. In general, thelarger clients attract more dialogue on transportissues, so it is generally in the smaller countrieswhere greater use is made of conditions.Project SupervisionWith regard to supervision, QAG showed, basedon 51 assessments of Quality at Supervision, that69

A DECADE OF ACTION IN TRANSPORTthe performance of the transport sector is excellent—betterthan the rest of the Bank in all categories.The latest figures for Quality at Supervision,which include an additional 12 projects, continueto show remarkably good supervision performanceby the transport sector. IEG found that becausetransport experts tend to have technicalbackgrounds and many years of project experience,they are usually familiar with the necessaryrequirements to ensure the delivery of wellpreparedand robust projects.Lending InstrumentsThe choice of lending instrument is important.IEG analyzed the kinds of instruments selected fortransport projects over the past 10 years (see appendixA, tables A.4 and A.5 and figure A.13).Comparing the period fiscal 2001–06 with fiscal1995–2000, there has been a definite swing awayfrom using Specific Investment Loans—from 70.2percent down to 62.4 percent. More programmatictype loans are now chosen, such as theAdaptable Program Loan, which provides phasedsupport for long-term development programs—each phase builds on the lessons of the previousphase—as well as Programmatic Sector Loansand Programmatic Structural Adjustment Loans.In IEG’s view, the move toward programmaticloans is a positive step because it enables a broaderview to be taken and enhances country ownership.Preliminary results from other sectors such ashealth suggest that programmatic loans lead tobetter policy dialogue and a better approach tocapacity building.Results MeasurementMonitoring and EvaluationResults measurement is still one of the weakerareas of Bank performance in the transport sectoreven though there are signs that an effort is beingmade to improve this situation. Very few projectscompleted and evaluated by IEG had specific monitoringand evaluation development objectives; ofResults measurementremains weak but isimproving.those that did, paradoxically, onlyone-third of the outcomes weresatisfactory. QAG, on the otherhand, rated monitoring and evaluationas satisfactory at entry in 67 percent ofprojects reviewed. IEG observed that there are seriousattempts in more recent projects to includea considered matrix of development indicatorsand a log-frame in the appraisal document andICR, but many of these projects are still active andhave yet to be reviewed by IEG.The main problems remain a lack of baseline informationand a lack of capacity to undertake themonitoring function. In some instances IEG observedthat indicators proposed at appraisal wereabandoned when it was realized that they were impractical.New indicators were then formulatedbut were sometimes compared with projectionsin the last project status report rather than theoriginal appraisal benchmark.In some instances the focus continues to be onoutputs rather than outcomes. The Middle Eastand North Africa Region had a workshop in 2004to develop pilot indicators for rural access. Theidea was to demonstrate to borrowers the valueof establishing and maintaining performance indicators.Morocco was used as an example (appendixB). In this case the benefit of the indicatorswas demonstrated and resulted in an extensiverural access program. However, the case studyshows that a comprehensive approach is neededto gather data and that government ownership iscritical. In the future the revised ICR guidelines areexpected to lead to a behavioral change with respectto results measurement, because staff willbe aware that the performance of projects in monitoringand evaluation is to be specifically assessed.Transport sector management has committed tostrengthening sector indicators in line with the infrastructureaction plan, and the first “headline indicator”established is for rural accessibility.“Sustainable access to rural transport” measuresthe number of people who live within 2 km of anall-season road. Results from 31 countries representing83 percent of the total rural populationin all IDA countries show that, on average, 64percent of rural dwellers have access to the transportnetwork. Other indicators under developmentinclude urban mobility (mean time for70

INTERNAL BANK PERFORMANCE FACTORSjourney to work), road condition (percentage ofnetwork in “good” and “fair” condition), and tradelogistics (composite index comprising inventory,transit time, customs, and handling productivity).The SSATP is also undertaking work in thisarea, as the Africa Region data are often particularlypoor.Setting Clear ObjectivesAnother important measurement area is performanceagainst development objectives. Overthe review period, IEG found projects with vagueobjectives (Burkina Faso, China, and Comoros)and overly ambitious objectives (Turkmenistan)and a case where the development objectivesand indicators were not formally revised despitemajor changes in project direction and scope(Bangladesh). Other projects had objectives thatwere difficult to meet because they were too specific(Zambia) or just too numerous (Rwanda had14). But there are also many examples where justthe right balance seems to have been achieved(among them Lao PDR and Mauritius). The QAGscore of satisfactory or better for the clarity, realism,and scope of the project’s development objectivesis 64 percent (8 points lower than the Bankaverage), which supports IEG’s findings.In the transport sector in general (except forrevenue-earning entities) there is a shortage ofgood global and regional supporting data in comparisonto, for example, the agricultural, health,or housing sectors where a UN agency takes responsibilityfor the data-gathering function. Atthe local level it would be extremely useful if taskteam leaders were able to assess changes in roadfreight rates on completion of road projects—thiswas done very effectively in Peru. Similarly, urbanand rural public transport service frequency andaccessibility can be used to assess the effectivenessof new investments.In the past, when the focus was often on intercityroads, the standard engineering models would suffice.But increasingly there is a need to look at therural access and urban situations where a differentkind of information is needed. This is clearlya serious gap in the transport sector approach atThe development ofproject objectivessuffers from lack ofmanagement attention.present. Data for railway,port, and aviation projectsare normally adequate becauseof the scale and accountabilityrequirementsof the operations and thecollection of data, either because the data are nationallyowned or because the operators processtheir traffic through a national data collectionagency, such as customs or immigration. It hasbeen part of the Bank’s role to try to ensure thatany uneconomic services are transparently identifiedso that it is clear how such services arebeing subsidized. This is not always easy to unravelfrom railway accounts, where there are numerousjoint costs attached to different services.Assessing EfficiencyMost Bank-financed road projects are justified byan economic appraisal based on transport cost savings.Net present values and ERRs are often calculatedusing the Highway Development andManagement System known as HDM-4. For lowvolumeroads the Roads Economic DecisionModel performs an economic evaluation of roadinvestment options using the consumer surplusapproach. Neither of these models looks at the distributionof the benefits or at the wider impactsand multiplier effects on the economy. 2 For impactson the poor some information is availablefrom the impact studies undertaken in Brazil andMorocco (appendix B); further information maybe available soon from Ghana. Table 7.1 showsERRs before and after for a sample of 96 transportprojects. 3Most transport projectscalculate rates of returnbut seldom consider thewider distribution ofproject benefits.Of note is that, on average,the ERR for road projectswas similar at appraisal andcompletion, but the ERRfor rail and port projectstended to underestimatethe costs and overestimatethe benefits at appraisal. Given that IEG looksfor a minimum ERR of 10 percent on infrastructureprojects, the results below in general lookgood. But the cutoff at this level is possibly toolow 4 because so many projects qualify and the71

A DECADE OF ACTION IN TRANSPORTTable 7.1: Average Economic Rate of Return of Transport Projects,Approval Years 1995–2005No. ofNo. ofprojectsprojectswith ERR ERR at ERR with ERR ERR at ERRestimates appraisal range at estimates at completion range atMode at appraisal (%) appraisal completion (%) completionMultiple modes 13 36 (16–91) 11 31 (14–78)General transport (urban) 11 26 (13–40) 8 30 (13–60)Roads and highways 59 29 (12–65) 53 29 (10–79)Trade facilitation 1 19 19 1 27 27Railways 7 32 (15–68) 5 22 (–14–64)Ports and waterways 5 26 (18–37) 4 16 (11–22)All transport 96 30 (12–91) 82 28 (–14–79)Source: IEG data.Note: ERR = economic rate of return.HDM-4 factor for time savings on road projectsmay be exaggerated, according to some experts(Carruthers, Bajpai, and Hummels 2003).Results measurement could also be used more effectivelyto settle important areas of controversy.The sustainability of the strategy of using roadfunds and road agencies will continue to be questioneduntil there has been a thorough study tomeasure their impact over a period of years, preferablyin Africa. Until now the evidence has been positivebut not conclusive. A good example may beEthiopia, where a Monitoring and Evaluation Unithas now been established. The SSATP has alsocommissioned further work on this topic.Transport Sector StaffingFiscal 2000 commitments by the transport sectorwere $1.7 billion (18 additional projects to the activeportfolio); by fiscal 2004 they had increased to$3.7 billion (31 additional projects) and appear tobe stabilizing at $3.5 billion. In contrast, in June2000, the total number of Bank transport professionalswas 141, but by June 2005 the number hadLending has more thandoubled in the past fiveyears, while the staffcomplement hasstagnated.fallen to 133. Although thereis a trend toward larger projects,the average workloadper staff member has clearlyincreased. According to the2006 strategic update staffingpaper (World Bank 2006f ),the number of staff Bank-wide has been in declinesince fiscal 2004; projections for rebuilding theBank’s skills base have not materialized because ofcontinued business uncertainties. Some infrastructuresectors such as transport, however, appearto have been hit harder by flat or lower budgetsbecause their commitment rate was rising at thetime the budget constraints were introduced.The IEG (fiscal 2006) interviews of a sample of 36of the 122 specialists and task team leaders (excludingmanagers) found that Washington-basedstaff working in operations spend, on average, 4.6months on mission. (The figure for Anchor staff is3.6 months and for country office-based staff is 3.7months.) About 53 percent of respondents said thiswas too long, and there was a close correlationbetween persons spending more than 4 monthsaway from home and those who believed theywere overloaded. No comparable figures wereavailable for the Bank as a whole; the 2006 strategicupdate staffing paper (World Bank 2006f) doesdiscuss the heavy demands of travel, which oftentakes time away from weekends and holidays, especiallyin Regions where missions are longer. Recuperationand family time after long missions areoften minimal.Respondents indicated that three areas sufferwhen a high workload is perceived. The first is theability of the staff member to keep up with new72

INTERNAL BANK PERFORMANCE FACTORSdevelopments in his or her area of expertise andto participate in thematic discussions. The secondis the time to disseminate his or her knowledgein the field, and the third is a tendency to avoidoverly complex projects. Some commented thatwhile “financial productivity”—in the sense ofthe time to move a project from identification toapproval or the operational cost per project—hasimproved, there may be a hidden price for this result,both in quality and in what can no longer bedone in other areas.The “high pressure” created by this situation hasalso been a recurrent theme in the QAG panels’criticisms of transport operations. Those criticismsinclude excessive narrowness and lack of ambition.For example, one urban transport project in thePhilippines was described as “technically sound, butnarrowly conceived.” The project missed an opportunityto address broader, long-neglected policyissues, as this was the first urban transportproject in a decade in the country, and no urbanspecialist was consulted by the transport team.IEG findings, including feedback from staff andstakeholder interviews, confirm the general perceptionthat complex, high-impact projects aresometimes deferred in preference for simpler projectswith shorter lead times that have less impact.When staff interviewees were asked, for example,what in their opinion constrained the sector fromundertaking more urban transport projects, theresponse was invariably the time taken to prepareprojects in a complex environment in which therewere multiple stakeholders, and environmentaland safeguard issues, including the relocation ofmany more project-affected persons.The recent referral of the Mumbai Urban TransportProject to the Inspection Panel 5 was cited as an exampleof the hazards of increasing complexity.However, the results of the work on resettlementin Mumbai may prove in time to be more valuablethan the physical outcome of the project. Somestaff indicated that there was no internal incentivefor them to get involved in more difficult, timeconsuming,and risky projects; indeed, the natureof complex projects with many safeguard issuesacted to discourage task team leaders. Otherssaid there was a tacit understanding in somecountries that because theBank’s processes were elaborate,other financiers might bepreferred for urban projects.A further factor has also been the restriction onsubsovereign lending. There is currently an ongoingdiscussion as to how the Bank Group canestablish a Sub-National Development Program,and further investigation of risk-sharing, legal,and other issues on this matter is in progress.Although the Bank urban strategy review Citieson the Move (World Bank 2002a) provided abroad strategic framework for dealing with urbantransport projects, sector management has notyet finalized a plan to fully operationalize thisframework.Apparent “productivitygains” have hiddencosts.Attrition due toretirement is aconcern.The main risk of undertakingmore complex projects is thatbecause of longer preparationtime, fewer projects overallwill be completed with the same resources. Itis also possible that the number of successfulprojects will decline because there are more factorsthat can go wrong and more stakeholders tobe satisfied. Nevertheless, the world is inexorablybecoming more complicated, and this means thatthe Bank must prepare itself to meet such complexitieshead on. Although this is a riskier strategy,it is clearly the right way to go.Another area of concern is the number of seniorstaff approaching retirement—some 17 percent ofthe current professionals are due to retire in thenext 5 years; this pattern is not unique to thetransport sector, as the Bank as a whole is anticipatingan increase in attrition. However, the lossof experienced personnel is a concern, especiallybecause based on past experience, only a few staffare likely to be retained as consultants after retirement.Some respondents also mentioned theapparent long lead time to replace lead internationalexperts. These problems are being addressedthrough targeted recruitment of new experts andbatch recruitment of specialists and task teamleaders. But respondents in general recognized thatthey were working in a difficult environment becauseof the shortage of senior staff and the implementationof a strict cost-containment regime.73

A DECADE OF ACTION IN TRANSPORTExcessive controlsmay do more harmthan good.Some transport interviewees indicateda lack of commitment tothe matrix management systemor believed it did not add sufficientvalue. Others were moreconcerned that the lack of resources restricted theAnchor’s capacity to provide guidance in keyareas. Several country office-based staff believedthat decentralization had not gone far enoughand that there should be more delegation to staffworking at the country level. There was a measureof reluctance on the part of headquarters staff toconsider working in country offices, especially infragile countries, because they felt it damagedtheir career prospects and negatively affectedtheir families in a number of ways.Other issues raised by staff included a need to workmore efficiently and smartly, as well as a need forgreater flexibility in the application of safeguardpolicies. On this last point QAG refers to the “paradoxof compliance,” in other words spendinggreat effort doing no harm, but at the cost ofdoing little good. The example cited in an urbantransport project was the extraordinary admissionthat “to comply with safeguard policies, the teamhas dropped all components with major resettlement.”Although this is an extreme case, in IEG’sview, based on the portfolio analysis and interviewresults, the issue remains a serious concern.Very few staff seemed to have considered an alternativeparadigm in which greater selectivity ofprojects is made. The quantity of projects wouldbe reduced, but the quality of Bank output wouldimprove substantially. The selection of projectscurrently tends to be demand driven, but thereis a case that if the Bank entered into greater dialoguewith its borrowers about future transportsector scenarios, there might be a small but significantshift in the mix of projects and AAA workundertaken.74

8Findings, Lessons,and RecommendationsThis final chapter reviews the findings and lessons from the IEG evaluation.It also provides recommendations to management to improveBank effectiveness in the transport sector. It recognizes that the worldis changing rapidly and that the Bank will have to be flexible and adapt its supportprograms to meet the emerging challenges.Findings and LessonsCurrent World Bank transport strategy is foundedon the three pillars of private sector involvement,continuing sustainability, and development of anappropriate urban strategy. This foundation remainsrelevant today but requires adjustment tothe more complex emerging environment. Thepast is not necessarily a guide for the future, evenwhen a sector has a solid record of achievement.It will be necessary to shift from a “cylindrical” or“silo” approach to a more sector-interlinked approach.This may or may not require more resources,depending on the relative priority oftransport to competing needs, but it will certainlyentail a smarter use of resources.Role of the Public and Private SectorsThe Bank’s encouragement of greater private sectorparticipation in the transport sector where feasibleis supported by this evaluation’s findings.International experience generally—and BankGroup experience in particular—shows that thisapproach has usually led to significant improvementsin transport sector performance. However,for various reasons, some countries prefernot to opt for full privatization in favor of moremodest models of private sector participation.Bottlenecks in transport result from inefficienciesin the use of available resources, lags in theengineering and managerial technologies applied,and failures to make timely investments in capacityexpansion. This evaluation indicates that themost positive impact of changes in the publicprivatesector balance will be cases that can eithersharply reduce such inefficiencies or significantlyraise the productivity of the capital stock alreadyinvested in the sector. Improvements in tradeprospects and technological advances (such aselectronic pricing techniques or the increasingscale of ships and aircraft) suggest that there is stillsubstantial scope for further gains of this sort.The impact of privatization has usually been moresignificant when the privatization process includesmeasures to reduce the amount of regulation ofthe mode concerned and when the structures offeredto private bidders are designed to sustaincompetition. At the same time, for impact, appropriatemeasures need to be taken to ensure75

A DECADE OF ACTION IN TRANSPORTaccess of competing providers to any facilitieswith local monopoly characteristics. Althoughthere is less scope for private sector involvementin the poorest countries, a major reason for thesuccess of several concessions has been the Bank’swillingness to fund retrenchment costs and programsto improve opportunities for workers whonow have to make a different choice of livelihood.Full transport concessions remain concentratedin middle-income countries, where the volumesof traffic are attractive and there is sufficient publicsector capacity to engage with the private sector.IEG recognizes, however, that the positiveimpact of even one or two concessions in a lowerincomecountry can have a dramatic effect. Actualpossibilities of attracting private capital into transportinfrastructure vary greatly over time andamong countries. But there are instances in portsand large bridges, where even poor countrieswith uncertain prospects have been able to attractforeign private sector interest at certain stages inthe financial markets’ cycle. A further aspect toconsider is that several countries, especially in EastAsia and the Pacific, are poised to attain middleincomecountry status. This means that the Bankmust remain competitive in the assistance it canoffer with respect to PPPs.One aspect in which the public sector frequentlyneeds strengthening is strategic and structuralplanning, most particularly when increased privateparticipation is being considered or is undergoingits running-in period. Government has an irreplaceableplanning role in transport. This ispartly because of the need for active consensusbuilding among the different modes to maintainan effective integrated system. But it is also dueto the importance of transport infrastructure,and especially the road and rail networks, in structuringland use and regional development moregenerally. Multimodal strategic planning is particularlycrucial at the national and metropolitanlevels of government.In parts of Asia and Africa where the study teaminquired into reasons for the absence of reformsthat have proved productive elsewhere, the mainobstacle to progress appears to be local fearsamong labor, but also among concerned bureaucratsand less dynamic enterprises, of losingtheir acquired positions. This problem is often exacerbatedby laws and regulations, often datingback several decades, which may never have beensound but have built up over time an array ofsupporting interests. Bringing about changes inpublic-private balance requires multiple scarcepolitical skills, particularly of communication togenerate wider understanding of the opportunitiesbeing missed; of alliance building, to gatherpolitical support; of negotiation, to win the toleranceof those who expect to suffer; and of effectiveimplementation, including respect for therights of all concerned.Considering distributional as well as environmentalaspects of projects, there would seem tobe a need for more combinations of larger-scalepublic and private financing than is so far generallyundertaken in developing countries, morealong the lines of some recent projects in continentalEurope. This can bring the advantages ofprivate management into areas that have higheconomic priority but cannot be expected to becomefinancially viable rapidly.Maintenance, Institutional Development,and Environmental ProtectionImproving the strength and efficiency of the privatesector role in road maintenance is a matter that remainsimportant in all countries, as different stagesof development are achieved and new techniquesare developed. Key components on the publicside include serious commitment at the highestlevel within each concerned body to the eliminationof corruption and achievement of high standardsof governance; development and continuousupdating of the management information systems;both central and decentralized capacities for planningand contract management; adoption and systematicenforcement of transparent competitivebidding practices; financial flows to the different levelsof government involved; and gradually increasinguse of performance-based contracting.Important contributions from the private side (withpublic support) are training, development of commercialequipment-supply enterprises, and an effectivecontractor association.76

FINDINGS, LESSONS, AND RECOMMENDATIONSLinked to this is the effectiveness of governanceand capacity building in the sector. By and large,technical assistance to strengthen client capacityhas had modest results in low-income countriesbut better results in middle-income countries.While the road agencies and some of the railwayreorganizations have demonstrated continuingsupport and success, in many other cases traininghas been aimed at assisting the immediateproject and is therefore less likely to have any sustainedimpact. Typically, the timing of training interventionsis not always synchronized with thenecessary organizational changes needed to improvepublic sector performance. Institutionalchange takes time, and often the life cycle of theproject intervention is relatively short—about 5years; this is often insufficient to ensure lastingresults. Institutional objectives need to be designedmore realistically and be pursued incrementally;that kind of continuing support programwill often extend beyond the transport sectoritself.A further lesson is the need to choose a single clearcriterion for selecting a prequalified bidder. Contentionamong interested parties and at the politicallevel seems to be minimized by using therelatively simple and straightforward criterion ofmaximum payment (or minimum subsidy demanded)for the right to provide services. Servicesmust meet the performance standards specifiedin the tender documents.There is sufficient evidence to show that the useof second-generation road funds, especially inAfrica and Central America, has met with modestsuccess—in a few cases substantial success. TheBank has learned to be pragmatic and tends topromote road funds only when the budget approachhas failed. The Bank has learned as wellto take into account the different circumstancesprevailing in each country. In some countrieswhere second-generation funds have been introduced,there is evidence of an increase in thepercentage of roads in good condition. However,in one-third of Sub-Saharan African countries withroad funds, the income is insufficient to cover routinemaintenance costs. Nevertheless, the flow offunds has become more stable and predictable.Road funds, however, should not be contemplatedwhere there is a high level of corruptionor where there is little likelihood of having independentaudits and transparent procurement. Itwould be beneficial if a rigorous study of the impactof the successful road funds could be undertakento show why they have succeeded.Nevertheless, road funds often come as part of apackage that leads to improvements in road departmentaccountability. This can be attributed tothe establishment of road agencies and roadboards and contracting out to the private sector,not only of construction and rehabilitation but alsoof routine maintenance, design, and general supervision.Transparently competitive tenderingof works against performance-based specificationshas been a very significant step forward, ashas the representation of the public and usergroups on road boards.In general, both client perspectives and pertinentdocuments show that there is positive support forthe Bank’s actions in ensuring environmental sustainabilityand providing safeguards for peopleaffected by new projects. There is also generalsupport for capacity-building activities and assistancewith coordination between institutions andeven different tiers of government. The demandfor roads is likely to continue unabated, but thereis recognition, at least in middle-income countries,of the importance of environmental, social,economic, and institutional issues related to citygrowth. Stakeholders saw relative neglect of bothurban transport and intermodal efficiency. Somealso perceived slowness in the Bank’s decisionmakingprocesses.Poverty ReductionThere has been an important shift in mind-set. Theold mind-set said that the objective of a transportsystem in a developing country is to build the besttransport system that can be afforded. Now theobjective is to design a system that optimizestransport as an intermediary good to achieve asound poverty-reduction strategy, obviously withinresource constraints. Poverty-reduction projectsare often multidisciplinary, and experience showsthat when the transport component is small and77

A DECADE OF ACTION IN TRANSPORTthe project falls under a sector board other thantransport, the outcome is often unsatisfactory.The need for guidelines for and/or oversight ofthese components is apparent.When a country has very limited resources and severecapacity constraints, a programmatic approachto roll out development assistance, inconsort with other donors, may be the most effectiveway to proceed and build capacity. Capacitybuilding, especially in fragile states, takes time,and it is necessary to be realistic about what canbe achieved and how it can be achieved. A phasedapproach appears to yield the best results, becauseeach phase can build on lessons from previousphases; the work plan may also have to gobeyond the immediate project and sector to befully successful. Clear milestones are essential.The needs of the transport sector are changing,and the composition of the sector portfolio maybe cause for concern, with its heavy emphasison intercity highways. Analysis of input from stakeholdersand staff elicited a view that the Bankshould perhaps be taking on more projects inrural access, urban transport development, andmultimodal transport. Given the implications ofthis for achieving the MDGs, there should be amore informed debate about relative prioritieswhen CASs are prepared. Because the Bank financesjust 2 percent of total infrastructure spendingin developing countries (Oxford Analytica2005), it should try much harder to achieve thebest balance between financing high-priority butless-challenging projects and ones that will demonstratenew ideas and approaches.Evidence from both IEG and QAG suggests thatover the past 10 years transport in general hasbeen an efficiently run but sometimes insularsector. The present operational strategy will notnecessarily continue to be appropriate in the future.In particular, the relative neglect of knowledgedissemination, both internally and externally,is significantly less than would reasonably be expectedfrom such a large sector. Although someimportant AAA work has been carried out in severalcountries, the effort is spread rather thin,and awareness of this high-quality work is notas widespread as it should be. Better linkagescould also be made with research institutions,and internally the sector needs to change theperception that it has few research needs. Firmerinformation is needed about the relationshipsbetween transport and poverty, as well as aboutthe added value the Bank can deploy when itsupports such projects.Future ChallengesSector leadership, in IEG’s judgment, has correctlyidentified the future challenges of the 21stcentury in its draft update of strategic priorities.Through the strategy it wishes to support theMDGs more fully by refocusing emphasis on issuessuch as the provision of clean, affordable, andsafe transport. This does not imply that the demandfor traditional highway financing is expectedto decline but rather that emerging additionalpriorities will have to be addressed and customizedon a Regional and country basis. Such ashift would not be a unilateral decision by theBank; it would result from a gradual concerted effortto encourage clients to put forward moreprojects relating to emerging issues. Inspectionof the list of projects now in preparation showsthat this is already happening.The arguments in support of improving transportaffordability are strong. Affordability cutsacross the entire transport spectrum and the suggestedincreased focus on the rural and urbanpoor fit well with the poverty-reduction agenda.This will entail closer cooperation with the healthand agriculture sectors and with experts in the social,gender, urban, rural, and human developmentfields. More projects aimed at removing crossbordertrade barriers will also reduce freight costsand improve the affordability of consumer goodsand inputs into the productive sectors. The interfacehere is with industry, trade, energy, finance,and resource management. The shifttoward more multimodal operations, includingsupply chain management, is already apparent.The greater emphasis on safety also supportsthose MDGs that address health issues. Every yearmore than 1.2 million people are killed and up to50 million more are injured on roads worldwide;the prediction that by 2020 road accidents will becomethe third-largest contributor to the global78

FINDINGS, LESSONS, AND RECOMMENDATIONSburden of mortality and injury is hardly surprising.Bank-financed projects until recently have rarelytackled road safety holistically, but there is evidencethat new road safety approaches are being pursuedin all Regions—not just in urban areas but also onintercity highways and rural roads.Add-on safety components in rehabilitation or constructionprojects may have resulted in the introductionof some safety features or the eliminationof accident “black spots,” but they were nevergoing to introduce significant, meaningful institutionalchange. An alternative approach, based onlarge multisector projects involving education,policing, health, works, and other departments, isunder development, but more coordination is necessaryto achieve improved results through betterstandards, implementation, and enforcement.Aviation safety has become an important andeven controversial topic as well because certaindeveloping country airlines with poor safetyrecords have been banned from the airspace ofindustrial countries. There is now a move to substantiallyupgrade both aviation safety and securityin developing countries, especially in Africa,and the Bank is expecting to sustain the recent increasein projects of this nature.Air quality has assumed new importance with thegrowing number of motor vehicles contributingto the volume of greenhouse gas emissions (Stern2006). Road transport alone accounts for nearlya quarter of the man-made gases believed to becontributing to climate change. Pollution, noise,ugliness, and wasted time caused by traffic congestionalso impose substantial societal costs. Thisis a powerful reason to increase support to urbantransport; it provides opportunities not only to reduceair pollution and other environmental damagebut also to explore ways to reduce thelong-term energy demand through traffic managementand pricing, constraints on the use of privatecars, and greater support for mass transitsystems and public transport in general.London has successfully introduced a central cityaccess charge, 1 while Austria, Germany, andSwitzerland have created electronic systems tocharge trucks for the costs that their movementsimpose on the roads. Such advances in technologyare expected to spread at least to middle-incomecountries in the near future.The Bank has already discovered that it can obtaingreater leverage from sources of fundingsuch as the Global Environment Facility and theUN Environment Program. Carbon finance initiativesin future years also have the potential tofund global research projects. The UN EnvironmentProgram recently launched a multimilliondollar public transport project covering three pollutedcities in Latin America. In Europe an emissionstrading scheme, which imposes carbondioxide emission limits on factories and power stations,has been introduced as the mainstay tomeet its Kyoto Protocol goals. Transport will be includedin 2013. 2However, caution is needed in the approach tothese issues, especially in smaller countries. InMadagascar, the authorities did not see clean airas one of the country’s most pressing priorities,and this aspect was dropped from the project. Anarea of controversy as to whether the Bank shouldbe adopting OECD best practice emissions technologyor older technology for developing countrieshas probably also not yet been fully resolved.The Bank needs to reach internal consensus onhow it should advise its clients.The rapidly increasing interaction between transportand other sectors is an important matter;there is no doubt that transport is developinginto a complex multisectoral business. But it is notyet clear whether the present deployment of internalresources available to the transport sectorwill be sufficient to meet these additional challengesas well as the substantial demand for themore traditional road-related projects. To IEG itappears unlikely that these new priorities can beachieved meaningfully without either scaling upsupport or reassessing sector priorities and engagingwith greater dialogue with borrowers.The next generation of projects will increasinglybe located in urban areas, and the Bank will be expectedto provide more support to the larger municipalities,metropolitan centers, and peri-urbanareas. This will require working across sectors79

A DECADE OF ACTION IN TRANSPORTthrough multisectoral teams and will generate increasingcomplexity in business. IEG notes that thistrend has already begun; in table A.7 it can beseen that for projects in the pipeline there is alreadya clear evolution toward more multimodalprojects and fewer roads and highways.Nonlending assistance in the transport sector appearsto be of good quality but in quantity is insufficient.If it is to progress beyond its presentstatus, it needs to be planned more strategicallywith better resources and more interaction withboth staff and clients. This implies much more effectivesharing of resources between networks;clearly the recent merging of the Infrastructurewith the ESSD Network is a positive step in thisdirection.An additional factor to consider is the pace ofchange in the business environment. For example,in the coming decade many East Asia and Pacificcountries will attain middle-income countrystatus, effectively changing the nature of the demandfor Bank services. Examples of where theBank is proactively offering new products andservices to remain competitive in comparisonwith other international financial institutions in thisdomain include reimbursable technical assistancein Saint Petersburg, Russian Federation, andknowledge partnerships with Thailand. Althoughthese initiatives have not been formally evaluated,the trend toward more innovation is clear.Other potential growth areas include introducingsubnational lending through a new facility (subjectto the caveat that some national governmentsare worried about subnational debt sustainability).Capacity at the subnational level varies considerably.For example, in the Middle East and NorthAfrica, few cities would contemplate taking onadditional debt. However, in other cases there isa great opportunity because the Bank’s comparativeadvantage lies in helping build capacity at asubnational level in support of national governments.This strength is expected to leverage additionalfinance for infrastructure.The anticipated increased dialogue with clients onall these issues will have to be supported by increasedESW activity, especially with respect toPPPs, including greenfield projects. More knowledgeservice products with mechanisms such aspeer-to-peer exchanges and twinning arrangementswill provide an environment for better outcomes;but they will also carry greater risks forsuccessful implementation because of increasingcomplexity and multiple stakeholders. The higherreward-higher risk mix may affect the measuredportfolio quality in the future, although complexurban transport projects have historically shownconsistently good results. It is clear, however,that if more complicated projects consume agreater quantity of resources, then fewer projectscan be completed overall.More programmatic lending and SWAps may beone way to help the Bank use resources more effectivelyand productively. The possible advantagesof pursuing this approach are strongercountry ownership and leadership, better policydialogue between the partners and stakeholders,greater focus on results in a programmatic framework,economies of scale, and likely a better approachto capacity building. Possible difficultieswith SWAps include disconnects between theagendas, policies, and procedures of participatingdonors. Transport sector SWAps have commencedin several countries; the proposed self-evaluationof their outcomes and the sustainability thereafterwill be further studied with great interest. Finally,the unique efforts in Africa through SSATP to promoteknowledge sharing will also need to be independentlyreassessed in the near future.Recommendations• Ensure that the focus of the Bank’s transportoperations goes beyond intercity highwaysand gives more attention to issues of growingurgency, including environmental damages,energy efficiency and climate change, trafficcongestion, safety, affordability, and trade. Thiscould entail a trade-off between a portion of thetraditional highway business and the newer,more complex challenges.• Prepare a Bank Group transport strategy witha sixfold emphasis: (i) greater attention to airand water pollution and realizing environ-80

FINDINGS, LESSONS, AND RECOMMENDATIONSmental gains; (ii) achieving greater synergiesacross relevant sectors—building on the mergingof the Bank’s ESSD and Infrastructure Networks;(iii) enhancing knowledge sharing andanalytical and advisory services and their contributionto country strategies; (iv) continuingto support private sector participation throughclose coordination among the Bank, IFC, andMIGA; (v) increasing attention to governanceand corruption issues; and (vi) redeployingstaff and budget resources accordingly.• Build up the sector’s monitoring and evaluationefforts and align them with the new strategy, includingthrough (i) the development over thenext year of relevant intermediate indicators applicableto the broad range of projects; (ii) thelaunching of an enhanced program of rigorousimpact evaluations for selected programs; (iii)a comprehensive self-evaluation of the experiencewith SWAps within 3 years; and (iv) an independentoverview of the SSATP Programwithin 2 years.81

APPENDIXES

APPENDIX A:STUDY LOGIC AND STATISTICSThe full background papers and country casestudies are available as separate documents. Acomplete list of active projects is also available, andis summarized in table A.9.MethodologyThis study is the first Independent EvaluationGroup (IEG) evaluation of the entire transportsector. In the past only subsectors such as urbantransport, railways, and ports have been reviewed.The evaluation uses the IEG-World Bank objectivesbasedevaluation methodology in which performanceis evaluated by measuring the Bank’sprogress toward its transport objectives. There arefour such objectives: (i) encourage competitivemarkets and help to balance the roles of the publicand private sectors; (ii) help clients achieve sustainablemanagement of the sector; (iii) supporttransport investments to contribute to poverty reduction;and (iv) respond to changes in the environmentto meet new challenges such asglobalization.The review covers the period from July 1995 toJune 2006, during which time there were 642projects with transport components in the portfolio.Of these, 335 have closed and 284 havebeen evaluated by IEG; 307 projects are still active.The extensive, customized database coveringall transport modes provides the foundationfor the analysis of project performance, their results,and the lessons learned from that experience.Bank transport projects are considered firstin terms of projects formally allocated to theTransport Sector Board and second for completenessof all projects containing a transportcomponent, irrespective of which Sector Boardis responsible. This covers project componentsunder the urban, rural, private sector development,public sector governance, social development,environment, poverty-reduction, and otherboards. However, interpreting the results of theseprojects requires caution, as most ratings in thesecases refer to the main project and not necessarilyto the transport component.The portfolio analysis is complemented by a reviewof the academic and professional literatureon transport issues in developing countries aswell as by nonlending assistance in the form ofWorld Bank economic and sector work (ESW)and strategy documents. With regard to public andprivate financing of transport infrastructure andservices, it was necessary to first undertake abackground review of evolving global experiencesince 1995, against which the Bank’s endeavorscould be benchmarked.To gain insights into operational issues and performance,particular attention was given to IEGtransport Project Performance Assessment Reports(PPARs). Field visits for these evaluationswere undertaken during the study period; 20completed between 2003 and 2005 were specificallyselected with this study in mind. These reportsprovide a spread of results across the mainmodes and the six Bank Regions. 1 In addition,three transport country case studies were selectedfor more detailed analysis: Brazil, India,and Tanzania; information from two completed impactstudies in Brazil and Morocco, a special multidonorevaluation in Ghana, and an Africanmultidonor assistance program known as theSub-Saharan Africa Transport Policy Program(SSATP) are included as well. Other case studiesare included as boxes to illustrate particularexamples of successful interventions. The mapin figure A.1 shows the location of cases and85

A DECADE OF ACTION IN TRANSPORTFigure A.1: Location of Supporting StudiesBulgaria,2005Romania,2005RussianFederation (2),2004Honduras,2004Morocco,1996Brazil,1997Ghana,2000Turkey,2004India, 2006Yemen,Republic of (4),2004Lesotho, Mauritius, 2005Brazil (2),20052006 Tanzania (2),2005China, 2005Vietnam (2), 2003Project performance assessmentCase studyImpact evaluationSpecial studyproject assessments; for more detailed informationon all the above reports, see annex B.An area of particular interest to the Bank is the effectivenessof road funds, an instrument used toredress the long-term underfunding of road maintenance.Over the past 10–15 years many Bankprojects or sector reviews (especially in Africa)have supported the restructuring of road managementand road maintenance finance, includingcreating independent road boards, establishingroad agencies, and setting up road funds. Becauseof the importance of this issue, a backgroundpaper on this topic was commissioned asan input to the study.The methodology also includes the results fromstructured interviews of one-third of Bank transportnetwork staff. These were used to understandstaff views on the performance of the transportportfolio, as well as issues arising from their experienceand ideas about how to improve Bankefficiency, and to try to understand the pressuresunder which they work. Both open-ended andspecific questions were put to the 36 randomlyselected staff members, covering task team leadersand specialists in the transport network encompassingall Regions, including the Bankheadquarters in Washington, DC, and countryoffices.The views of a selection of key stakeholders wereobtained using local consultants, one in each ofthe case study countries, to understand the perceptionsof government officials, users, providersof transport services, and interested parties suchas consultants and academics about the Bank’s assistanceand influence in the transport sector ineach of the countries concerned. Finally, a panelof transport sector experts was convened to advisethe study team and to review key evaluativedocuments and the final study report.86

APPENDIX A: STUDY LOGIC AND STATISTICSFigure A.2: IEG Transport Review: Inputs to the EvaluationPPARsImpact studiesIFC and MIGAinputsSpecial studiesRoad funds and public-private balance intransport infrastructure and services:Global overviewWorld BanktransportstaffinterviewsLiterature reviewWorld Bank researchand other reportsReview of ESW/AAAIEG transport reviewA Decade ofAction in Transport:An EvaluationCountry casestudies andstakeholderinterviews(Brazil, India, andTanzania)CEM: Country Economic MemorandaPERs: Public Expenditure ReviewsPRSPs: Poverty Reduction Strategy PapersCASs: Country Assistance StrategiesPortfolioreviewincludingstatisticalanalysisDatabaseWorld Banktransport projectsand statisticsNote: AAA = analytical and advisory assistance; ESW = economic and sector work; IFC = International Finance Corporation; MIGA = MultilateralInvestment Guarantee Agency; PPAR = Project Performance Assessment Report.Additional Tables and FiguresFigure A.3: IEG Ratings of Overall Project Outcome Transport Sector Board Projectsversus All Other Projects by Exit Year, 1992–2006% Projects moderatelysatisfactory or better959085807570656053738142627367489845472578732629636Fiscal 1992–94 Fiscal 1995–97 Fiscal 1998–2000 Fiscal 2001–03 Fiscal 2004–06Transport sector board projectsTransport (excluding large borrowers)All other projectsSource: World Bank database.Note: Numbers on figure indicate number of projects evaluated.87

A DECADE OF ACTION IN TRANSPORTFigure A.4: IEG Ratings of Institutional Development Transport Sector BoardProjects versus All Other Projects by Exit Year, 1992–2006% Projects substantialor better807060504030206367884736295481Fiscal 1992–94 Fiscal 1995–97 Fiscal 1998–2000 Fiscal 2001–03 Fiscal 2004–06677327362 5348972542Transport sector board projectsTransport (excluding large borrowers)All other projectsSource: World Bank database.Note: Numbers on figure indicate number of projects evaluated.Figure A.5: IEG Ratings of Sustainability of Project Outcomes Transport SectorBoard Projects versus All Other Projects by Exit Year, 1992–2006% Projects likelyor better807570656055504540537342816248967725738478 62973263654Fiscal 1992–94 Fiscal 1995–97 Fiscal 1998–2000 Fiscal 2001–03 Fiscal 2004–06Transport sector board projectsTransport (excluding large borrowers)All other projectsSource: World Bank database.Note: Numbers on figure indicate number of projects evaluated.88

APPENDIX A: STUDY LOGIC AND STATISTICSTable A.1: IBRD/IDA: All Nontransport Commitments ($ billion):Share of Top 5 and Top 10 Countries, Fiscal 1995–2000 and Fiscal 2001–06CommitmentsCommitmentsfor Fiscal Share of for Fiscal Share ofCountry 1995–2000 total (%) Country 2001–06 total (%)China 10.9 9 Turkey 8.6 9India 9.4 8 India 7.5 8Argentina 7.9 7 Brazil 7.5 8Russian Federation 7.8 7 Mexico 6.4 7Mexico 7.1 6 Argentina 4.5 5Korea, Republic of 7.1 6 Pakistan 3.7 4Indonesia 6.3 5 China 3.2 3Brazil 5.3 5 Colombia 3.2 3Turkey 3.2 3 Vietnam 3.1 3Thailand 3.1 3 Bangladesh 2.5 3Total (all other countries) 48.7 41 Total (all other countries) 45.7 47Total 116.8 100 Total 95.9 100Share of top 5 countries 37 37Share of top 10 countries 59 53Figure A.6: IBRD/IDA Commitments and Share by Transport ModeRailways9%Railways5%Ports6%Ports2%Roads73%Aviation0%Roads75%Aviation3%Generaltransport12%Fiscal 1995–2000 Fiscal 2001–06Generaltransport15%Source: World Bank data.89

A DECADE OF ACTION IN TRANSPORTTable A.2: IBRD/IDA Commitments for Transport on Per Capita Basis—Selected Recipient Country Rankings (Fiscal 1995–2006)Fiscal 1995–2000 Fiscal 2001–06RankRankRank (top 10 Rank (top 10$ per (per capita recipients of $ per (per capita recipients ofcapita World Bank World Bank capita World Bank World Bankfiscal transport transport fiscal transport transportCountry 1995–2000 commitments) commitments) Country 2001–06 commitments) commitments)Croatia 47 1 Croatia 41 1Uruguay 39 2 Uruguay 32 2Argentina 32 3 6 Azerbaijan 30 3Panama 30 4 Madagascar 19 4Macedonia, FYR 27 5 Mozambique 16 5Mauritius 24 6 Honduras 16 6Albania 22 7 Lebanon 16 7Lebanon 20 8 Nicaragua 15 8Lesotho 18 9 Mongolia 14 9Senegal 17 10 Argentina 13 10 5Poland 11 24 10 Colombia 8 20 8Brazil 10 26 2 Congo, Dem. Rep. of 7 27 9Russian Federation 8 29 4 Vietnam 6 35 6Mexico 6 40 7 Egypt, Arab Rep. 5 39 10Vietnam 6 42 9 Mexico 4 46 7Bangladesh 4 54 8 India 4 49 1China 3 58 1 Brazil 4 53 4Indonesia 3 59 6 Indonesia 3 55 3India 1 71 3 China 2 63 2Source: World Bank database.Note: Excludes countries with population less than 1 million as of 2000; countries in bold also listed in table 3.1 in main text.90

APPENDIX A: STUDY LOGIC AND STATISTICSFigure A.7: Distribution of IBRD/IDA Transport Commitments by per Capita Income(Fiscal 1995–2005)Upper middle income(IBRD) US$6.2b, 18%High income (IBRD)US$0.2b, 1%Low income (IBRD/IDA)US$13.0b, 38%Lower middle income(IBRD/IDA) US$14.7b, 43%Low income: US$10,066Source: World Bank data.Figure A.8: IEG Transport Ratings by Mode: Approval Year 1995–2006100801632164 4 11 58 285Percentage6040200HighwaysPorts andwaterwaysAviation Railways GeneraltransportMultiplemodeAllOutcome: Moderately satisfactory or better Sustainability: Likely or betterInstitutional Development Impact: Substantial or betterSource: IEG data.Note: Numbers in figure represent number of projects rated.91

A DECADE OF ACTION IN TRANSPORTFigure A.9: Trends in IDA Share of Bank (IBRD and IDA) Commitments for Transport(Fiscal 1995–2005)5US$ billions4328%20%16% 26%32%32%23%36%37%33%34%10199519961997 1998 1999 20002001 2002 2003 2004 2005Fiscal yearIBRD commitments for transportIDA commitments for transportSource: World Bank data.Note: Percentages indicate IDA’s share of total commitments.Figure A.10: IBRD/IDA Commitments for Transport by Region (Fiscal 1995–2006)1028%821% 20%US$ billions6414%13%24%0East Asiaand PacificLatin Americaand theCaribbeanSouthAsiaSub-SaharanAfricaEurope andCentral AsiaMiddle EastandNorth AfricaTransport sector projectsOther sector projectsSource: World Bank data.Note: Percentages indicate other sectors’ share of total commitments.92

APPENDIX A: STUDY LOGIC AND STATISTICSFigure A.11: IBRD/IDA Commitments for Transport Per Capita by Region(Fiscal 1995–2006)12109.9US$ per capita86423.45.23.42.16.63.05.53.03.5 3.71.40Sub-SaharanAfricaEast Asiaand PacificEurope andCentral AsiaLatin Americaand theCaribbeanMiddle EastandNorth AfricaSouthAsiaFiscal 1995–2000 Fiscal 2001–06Source: World Bank data.Figure A.12: IEG Ratings for Outcome, Sustainability, and Institutional Developmentfor Transport Projects by Mode (Approval Year Fiscal 1995–2006)10080Percentage6040200Outcome: Moderatelysatisfactory or betterSustainability: Likely or betterInstitutional developement:Substantial or betterRoads and highways (164 projects)Railways (11 projects)Ports (11 projects)General transportation (58 projects)Source: IEG data.Note: Aviation (four projects) had favorable ratings of 75% across all three rated attributes.93

A DECADE OF ACTION IN TRANSPORTTable A.3: Most Frequently Discussed Transport Issues in CAS Development PrioritiesTransportation general Institutional reforms Intercity highways Rural access roadsTransport bottleneck elimination Need for institutional reforms Poor quality and condition of Rural mobilityTransportation infrastructure Capacity buildingroad networkMissing links between mainand policyroads and rural roadsSustainabilityFinancing/regulationECA—upgrade to EU accessionstandardsBuilding adequate and reliabletransportation network insupport of economic growthRegional integration andtransport corridorsEasing of urban traffic congestionImproved accessibility for poor incitiesRestructure or concessionrailways, public transport, andportsEstablishment of road fundsPoor maintenance managementBorder transit improvementsReduce overstaffingSource: World Bank data.Note: CAS = country assistance strategy; ECA = Europe and Central Asia Region; EU = European Union.Insufficient capacity (roadnetwork)In-time road rehabilitationLack of maintenanceInadequate financing for roadmaintenanceMore focus on road safetyRoads supporting tourismPrivate sector contractingRoads, bridges, and drainageimprovements for all-weatheraccessFunding for rural access roads94

Table A.4: Number of Transport Projects by Lending Instrument (Fiscal 1995–2006)95Learning Poverty SectorAdaptable Development Emergency Financial and Reduction Programmatic Sector Structural Specific Investment and TechnicalProgram Policy Recovery Intermediary Innovation Support Sectoral Adjustment Adjustment Investment Maintenance AssistanceFiscal Year Loan Lending Loan Loan Loan Credit Loan Loan Loan Loan Loan Loan Total1995 2 2 1 34 4 1 441996 1 1 1 2 40 3 2 501997 2 1 6 52 3 2 661998 1 6 2 3 2 3 46 4 1 681999 8 6 1 6 3 1 41 1 672000 10 3 3 1 1 1 25 442001 7 3 1 1 3 40 2 3 602002 7 8 1 3 25 1 2 472003 4 4 1 1 3 32 1 3 492004 7 3 2 1 2 1 39 4 592005 8 7 3 1 31 1 512006 4 4 1 1 1 1 22 1 2 37Total Fiscal1995–2006 56 4 46 8 12 2 9 12 25 427 24 17 642Subtotal fiscal1995–2000 19 0 20 4 12 0 1 10 14 238 15 6 339Subtotal fiscal2001–06 37 4 26 4 0 2 8 2 11 189 9 11 303Source: World Bank database.APPENDIX A: STUDY LOGIC AND STATISTICS

96Table A.5: Percentage of Transport Projects by Lending Instrument (Fiscal 1995–2006)Learning Poverty SectorAdaptable Development Emergency Financial and Reduction Programmatic Sector Structural Specific Investment and TechnicalProgram Policy Recovery Intermediary Innovation Support Sectoral Adjustment Adjustment Investment Maintenance AssistanceLoan Lending Loan Loan Loan Credit Loan Loan Loan Loan Loan Loan TotalFiscal Year (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%) (%)1995 0.0 0.0 4.5 0.0 0.0 0.0 0.0 4.5 2.3 77.3 9.1 2.3 1001996 0.0 0.0 2.0 2.0 0.0 0.0 0.0 2.0 4.0 80.0 6.0 4.0 1001997 0.0 0.0 3.0 0.0 0.0 0.0 0.0 1.5 9.1 78.8 4.5 3.0 1001998 1.5 0.0 8.8 2.9 4.4 0.0 0.0 2.9 4.4 67.6 5.9 1.5 1001999 11.9 0.0 9.0 1.5 9.0 0.0 0.0 4.5 1.5 61.2 1.5 0.0 1002000 22.7 0.0 6.8 0.0 6.8 0.0 2.3 2.3 2.3 56.8 0.0 0.0 1002001 11.7 0.0 5.0 0.0 0.0 1.7 0.0 1.7 5.0 66.7 3.3 5.0 1002002 14.9 0.0 17.0 0.0 0.0 0.0 2.1 0.0 6.4 53.2 2.1 4.3 1002003 8.2 0.0 8.2 2.0 0.0 0.0 2.0 0.0 6.1 65.3 2.0 6.1 1002004 11.9 0.0 5.1 3.4 0.0 1.7 3.4 0.0 1.7 66.1 6.8 0.0 1002005 15.7 0.0 13.7 0.0 0.0 0.0 5.9 0.0 2.0 60.8 0.0 2.0 1002006 10.8 10.8 2.7 2.7 0.0 0.0 2.7 2.7 0.0 59.5 2.7 5.4 100Total fiscal1995–2006 8.7 0.6 7.2 1.2 1.9 0.3 1.4 1.9 3.9 66.5 3.7 2.6 100Subtotal fiscal1995–2000 5.6 0.0 5.9 1.2 3.5 0.0 0.3 2.9 4.1 70.2 4.4 1.8 100.0Subtotal fiscal2001–06 12.2 1.3 8.6 1.3 0.0 0.7 2.6 0.7 3.6 62.4 3.0 3.6 100.0Source: World Bank data.A DECADE OF ACTION IN TRANSPORT

APPENDIX A: STUDY LOGIC AND STATISTICSFigure A.13: Percentage of Transport Projects by Lending Instrument(Fiscal 1995–2006)Percentage70605040302010066.58.73.77.20.61.2 1.9 0.3 1.4 1.9 3.92.6APL DPL ERL FIL LIL PRC PSL SAD SAL SIL SIM TALSource: World Bank data.Note: APL = Adaptable Program Loan; DPL = Development Policy Lending; ERL = Emergency Recovery Loan; FIL = Financial Intermediary Loan; LIL = Learning and InnovationLoan; PRC = Poverty Reduction Support Credit; PSL = Programmatic Sectoral Loan; SAD = Sector Adjustment Loan; SAL = Structural Adjustment Loan; SIL = SpecificInvestment Loan; SIM = Sector Investment and Maintenance Loan; TAL = Technical Assistance Loan.Table A.6: Number of Transport Projects (1995–2006)Total fiscal Fiscal FiscalBy mode 1995–2006 1995–2000 2001–06 PipelineRoads and highways 380 202 178 45Ports, waterways, and shipping 29 19 10 3Aviation 9 4 5 0Railways 18 9 9 6General transportation 120 64 56 20Multimode 69 33 36 18Total 625 331 294 92Percentage share of transport projects (1995–2006)Total fiscal Fiscal FiscalBy mode 1995–2006 1995–2000 2001–06 PipelineRoads and highways 60.8 61.0 60.5 48.9Ports, waterways, and shipping 4.6 5.7 3.4 3.3Aviation 1.4 1.2 1.7 0.0Railways 2.9 2.7 3.1 6.5General transportation 19.2 19.3 19.0 21.7Multimode 11.0 10.0 12.2 19.6Total 100.0 100.0 100.0 100.097

98Table A.7: Completed Projects with Transport Components: Approval Year Fiscal 1995–2006IBRD/IDA IEG IEGLoan/ Approval IBRD/IDA TR IEG Sustain- institutionalCredit fiscal Sector Comm Transport comm outcome ability developmentProject ID No. Project Name Country year Board a Mode b (US$ m) share (US$ m) rating c rating d rating eRegion: AfricaP000117 C2924 TRANSPORT SECTOR INVESTMENTPROGRAM Benin 1997 TR TATP 40 80 32 S L SUP035645 C3073 Social Fund Benin 1998 SP TA 17 8 1 MS L SUP057345 C3098 BORGOU PILOT RSP Benin 1998 RDV TA 4 24 1 S L SUP035648 C3234 1ST DECEN. CITY MGMT. Benin 1999 UD TA 26 39 10 S L HP061577 C3479 BJ—PERAC (Publ Expend. Adjust.Credit) Benin 2001 PS TZ 10 5 1 MS L MP000276 C2332 Transport Sector AdjustmentProgram Burkina Faso 1992 TR TZ S L HP038801 C2668 EMERG. ASSIST PR.EAP Burundi 1995 PSD TA 15 7 1 S UL NRP035599 C2703 TRNSPT SECTOR TA Cameroon 1995 TR 10 0 0 S L SUP000393 C2869 CM-Transport Sect Prj (FY96) Cameroon 1996 TR TA 61 86 52 S L SUP054443 C3102 Cameroon—SAC III Cameroon 1998 EP TP 180 37 67 S L SUP051059 L7020 CM-TD/CM Pipeline (FY00) Cameroon 2000 EMT TATPTW 53 12 6P000438 C2864 PRIVATE/FINANCIAL SE Cape Verde 1996 PSD TP 11 2 0 S L SUP050956 C3027 ECO. REFORMS SUPPORT Cape Verde 1998 EP TZ 30 7 2 S L SUP075700 C3587 Structural Adjustment Credit Cape Verde 2002 EP TVTZ 15 34 5 HS L SUP060092 C3305 CF-Fisc Consolidation Credit SAD(FY00) Central African 2000 PSD TA 20 13 3 U UL NEGP044975 CN030 SAC II Chad 1997 EP TZ 25 8 2 S L SUP044305 L4558 TD-TD/CM Pipeline (FY00) Chad 2000 EMT TATPTW 40 12 5P044824 C3011 KM-Social Fund SIL (FY98) Comoros 1998 SP TA 12 23 3 MS NEV MP047250 C3468 KM-Infrast, Water & Env Prj (FY01) Comoros 2001 TR TA 11 54 6 NR NA NRP000567 C2635 Economic Recovery Credit Congo 1994 EP MU HUL MP075660 CH005 DRC Emergency Early RecoveryProject Congo, Democrat 2002 PSD TA 50 29 15 S L SUP000568 C2775 PRIVATIZATION & CB Congo, Republic 1996 PSD TZ 9 15 1 MU NEV MP037575 C2704 MUNICIPAL SUPPORT Côte d’Ivoire 1995 UD TA 40 29 12 U HU MA DECADE OF ACTION IN TRANSPORT

99P001165 ERC Côte d’Ivoire 1995 EP TP 100 33 33P001212 C2843 PRIVATE SECTOR DEVEL Côte d’Ivoire 1996 PSD TP 180 11 20 MS L MP040115 C2786 RAILWAYS REHAB Côte d’Ivoire 1996 TR TW 20 100 20 S L HP001194 CN022 CI-IVC PNGTER Rural Land (FY97) Côte d’Ivoire 1997 ENV TA 41 16 7P001177 C3100 CI-Transp Sec Adj (FY98) Côte d’Ivoire 1998 TR TATPTZ 180 59 106P044651 C2945 ER ROAD SECTOR ENGINEERINGPROJECT Eritrea 1997 TR TA 6 31 2 S L SUP044674 C3434,CH051 ER-Emerg Reconstr ERL (FY01) Eritrea 2001 FSP TA 90 20 18P000755 C3032 ET-Road Sec. Dev. Program SupportProj. Ethiopia 1998 TR TA 309 92 284 S HL SUP035595 L3777 TRANSPORT SECTOR TA Gabon 1995 TR TZ 5 35 2 S L SUP035626 L4387 PILOT COM. INFRA. UP Gabon 1999 UD TA 5 64 3 MS L SUP000957 C2858 gh High Sector Invest Prog Ghana 1996 TR TA 100 85 85 MS L SUP000973 C2836 GH-Urban Env Sanitation 1 (BD FY06) Ghana 1996 UD TA 71 5 4 MS UL MP041150 CN020 Ghana:VILLAGE INFRASTRUCTURE Ghana 1997 RDV TZ 30 22 7 S L SUP040557 C3228 GH -ERSO II Ghana 1999 EP TZ 178 12 21 U UL NEGP050624 C3330 URBAN 5 Ghana 2000 UD TZ 11 23 2 S NEV MP000961 C2555 Agriculture Sector InvestmentProject Ghana 1994 RDV U HUL NEGP049690 C3021 PUB.EXP.MNG.ADJ.CRD- ICR Guinea 1998 PS TA 70 4 3 U UL MP001074 C3196 Third Urban Development Project(APL) Guinea 1999 UD TA 18 40 7 S L SUP035915 C2748 TRANSPORT AND URBANINFRASTRUCTURE Guinea-Bissau 1995 UD TATP 22 62 14 HU UL NEGP001334 C2884 SAC I Kenya 1996 EP TZ 90 22 20 U UNC NEGP035691 C2812 KE—NAIROBI MOMBASA ROAD Kenya 1996 TR TA 50 93 47 S L SUP001319 C2811 KE-Urb Transp (FY96) Kenya 1996 TR TA 115 74 85 MU L NEGP056595 C3120 EL NINO EMERGENCY PROJECT Kenya 1999 UD TA 40 63 25 S L MP069501 C3406 Kenya Economic & Public SectorReform Kenya 2001 PS TZ 150 15 23 U L MP001403 C2857 Lesotho ROAD REHAB. & MAINT Lesotho 1996 TR TA 40 76 30 MS NEV MP058050 C3308 Community Dev. Support Lesotho 2000 SP TZ 5 8 0 U NEV NEGP035669 C2778 SOCIAL FUND 2 Madagascar 1996 SP TA 40 20 8 S UL MP001582 C2937,CN012 SAC I Madagascar 1997 EP TV 70 17 12 S UNC M(Table continues on next page)APPENDIX A: STUDY LOGIC AND STATISTICS

100Table A.7: Completed Projects with Transport Components: Approval Year Fiscal 1995–2006(continued)IBRD/IDA IEG IEGLoan/ Approval IBRD/IDA TR IEG Sustain- institutionalCredit fiscal Sector Comm Transport comm outcome ability developmentProject ID No. Project Name Country year Board a Mode b (US$ m) share (US$ m) rating c rating d rating eP048697 C2968 MG-Urban Infrastructure Project Madagascar 1997 UD TZ 35 36 13 S L SUP057378 C3218 SAC II Madagascar 1999 EP TV 100 8 8 MS L SUP064305 C3180 MG-Third Social Fund Prj (FY99) Madagascar 1999 SP TZ 15 20 3 MU NEV MP052208 C3364 MG-Transp Sec Reform & Rehab(FY00) Madagascar 2000 TR TATPTV 65 44 29 S L SUP080345 C3716 MG-Emerg Econ Recovery Crdt (FY03) Madagascar 2003 PS TZ 50 30 15 S L MP034489 C2696 MALAWI RAILWAYS REST Malawi 1995 TR TPTW 16 100 16 S L SUP001750 CN004 ML-Urb Dev & Decentr (FY97) Mali 1997 UD TZ 80 42 34 MU UL MP035617 CN037 Mali:GRASSROOTS HUN/POVT Mali 1998 SDV TA 22 16 3 MS NEV MP083799ML-Econ. Policy & Public Fin. Mgt(FY06) Mali 2006 EP TA 25 10 3P001866 C2726 FINANCIAL & PRIVATE Mauritania 1995 PSD TP 30 6 2 MS L MP034106 C2835 URBAN INFRASTRUCTURE& PILOT DEC. Mauritania 1996 UD TA 14 20 3 S L SUP001875 C2965 Mauri:RAINFED NAT RES MGT Mauritania 1997 RDV TA 18 4 1 S L SUP044711 C3272 MR-Iirrigated Agr Integr Dev APL(FY00) Mauritania 2000 RDV TA 38 4 2 MS L SUP001926 L3908,L3909 PORT DEV. & ENV PROT Mauritius 1995 TR TATP 31 95 29 HS L SUP075070 L7115 LKD Mauritius—PERL Mauritius 2002 PS TZ 40 13 5 MS L SUP035922 CN010 ERC III Mozambique 1997 EP TW 100 7 7 MS L SUP070432 C3336 Flood Emergency Recovery Project Mozambique 2000 PSD TZ 30 20 6 S NEV NEGP049878 C3709 MZ-EMPSO Mozambique 2003 EP TZ 120 25 30 MS L MP001770 C2065 Beira Transport Corridor Mozambique 1990 TR TATP S L SUP001790 C2374 First Road and Coastal ShippingProject Mozambique 1992 FS TATP S L SUP001802 C2454 Maputo Corridor RevitalizationProject Mozambique 1993 TR TP S L HP001777 C2628 Second Economic RecoveryCredit Mozambique 1994 FS MS L SUP001974 C2939 PUBLIC SECTOR ADJ. Niger 1997 PS TZ 30 11 3 MS UL MA DECADE OF ACTION IN TRANSPORT

101P035608 C3026 NE TRANSP. INFRA. REHAB Niger 1998 TR TA 28 99 28 MU UL SUP051931 C3138 Community Reintegration (CRDP) Rwanda 1999 SP TZ 5 20 1 MS UL SUP002364 C2681 P.S. ADJUSTMENT & CO Senegal 1995 EP TP 40 13 5 S L SUP044383 CN024 URBAN TRANSPORT REFORM TAPROJECT Senegal 1997 TR TZ 7 55 4 MS L SUP002365 C3006 URB DEVT & DECEN PRO Senegal 1998 UD TZ 75 16 12 HS L HP057996 C3315 SN-Natl Rural Infrastr (FY00) Senegal 2000 SDV TZ 29 20 6P002383 L3551 Environment and TransportProject Seychelles 1993 TR TA MU L MP002420 C2895 SL-Transport Sector SIM (FY96) Sierra Leone 1996 TR TATPTV 35 93 33 MS NEV MP002407 C2451 Roads Rehabilitation andMaintenance Project Sierra Leone 1993 TR TA MU L SUP002433 C2511 Freetown InfrastructureRehabilitation Project Sierra Leone 1993 UD TA MS UL MP002669 L3807 SZ-Urb Dev (FY95) Swaziland 1995 UD TA 29 14 4 S L MP002758 C2867 TZ—Urban Sector Rehabilitation Tanzania 1996 UD TA 105 30 32 HS L SUP002821 C2967 SAC I Tanzania 1997 EP TP 125 22 28 S L SUP002822 C3379 TANZANIA PSAC I Tanzania 2000 PS TZ 190 13 25 S L SUP002784 C2095 Second Port ModernizationProject Tanzania 1990 TR TP S L SUP002757 C2267 Railway Restructuring Project Tanzania 1991 TR TW U NEV SUP002875 C2989 ROAD TRANSPORT PROJECT Togo 1998 TR TA 50 93 47 MS UL SUP052263 C3195 Pilot Social Fund Togo 1999 SP TA 5 8 0 U UL MP057007 C3064 UG EL NINO EMERG RD REP Uganda 1998 TR TA 28 100 28 S L MP059223 C3203 UG-Nakivubo Channel Rehab SIl(FY99) Uganda 1999 UD TA 22 6 1 S L MP050438 C3510 UG-PRSC 1 (FY01) Uganda 2001 PS TA 150 8 12 MS NEV MP003236 C2993 ROAD SEC. INVESTMENT PROG.SUPPORT PROJ. Zambia 1998 TR TATZ 70 90 63 S L SUP035076 C3042 ZM-Power Rehab SIL (FY98) Zambia 1998 EMT TA 75 1 1P063584 C3355 ZM-ZAMSIF (FY00) Zambia 2000 SP TA 65 18 12P003227 C3433 ZM-Railways Restructing SIL (FY01) Zambia 2001 TR TW 27 25 7 S NEV SUP003246 C2515 Transport Engineering andTechnical Assistance Project Zambia 1993 TR TZ S L SU(Table continues on next page)APPENDIX A: STUDY LOGIC AND STATISTICS

102Table A.7: Completed Projects with Transport Components: Approval Year Fiscal 1995–2006(continued)IBRD/IDA IEG IEGLoan/ Approval IBRD/IDA TR IEG Sustain- institutionalCredit fiscal Sector Comm Transport comm outcome ability developmentProject ID No. Project Name Country year Board a Mode b (US$ m) share (US$ m) rating c rating d rating eP003222 C2577 Economic and Social AdjustmentProgram Zambia 1994 EP MS UNC MP045029 CN019 PILOT RDC Zimbabwe 1997 UD TA 12 34 4 U UL MP003318 C3083 PARK REHAB & CONSERV Zimbabwe 1998 ENV TA 63 23 14 NR NA NRRegion: East Asia and PacificP037088 C2739 KH-SOCIAL FUND (Project closed) Cambodia 1995 SP TA 20 10 2 S L SUP058841 C3216 KH-NORTHEAST VILLAGE Cambodia 1999 RDV TA 5 22 1 S UL MP050601 C3179 KH-SOCIAL FUND II Cambodia 1999 SP TA 25 20 5P073394 C3472 KH-Flood Emergency RehabilitationProj Cambodia 2001 RDV TA 35 50 18 S L SUP003493 L3910 Inland Waterways China 1995 TR TP 210 97 204 S L SUP003571 L3897 CN-7TH RAILWAYS China 1995 TR TW 400 99 396 MU L MP003612 L3787 XINJIANG HIGHWAY PROJECT China 1995 TR TA 150 99 149 S HL SUP003569 L3929 Shanghai-Zhejiang Hwy China 1996 TR TA 260 97 252 S L SUP003649 C2834 CN -SHANXI POVERTY ALLEV China 1996 RDV TA 100 10 10 MS HL SUP003652 L3986 CN-2nd Shaanxi Prov Hwy China 1996 TR TA 210 84 176 S L SUP040513 L4027 Second Henan Provincial HighwayProject China 1996 TR TA 210 99 208 S L SUP003590 CN028,L4187 CN-QINBA MOUNTAINS REDUCTION China 1997 RDV TZ 180 3 5 S HL SUP003643 L4099 CN-Second Xinjiang Highway Project China 1997 TR TA 300 98 294 S L SUP003654 L4124 CN-Nat Hwy2/Hunan-Guangdong China 1997 TR TA 400 100 400 S L SUP036949 L4327 CN-Nat Hwy3-Hubei China 1998 TR TA 250 99 248 S HL SUP049700 L4354 Irrigated Agriculture Intensification II China 1998 RDV TA 300 7 21 HS L SUP063123 C3169,L4438 YANGTZE FLOOD EMERGENCYREHABILITATION China 1999 RDV TA 80 51 41 HS HL SUP041890 L4453 CN-Liaoning Urban Transport China 1999 TR TATZ 150 96 144P003653 L4444 CN-Container Transport China 1999 TR TP 71 100 71 MS L SUP050036 L4421 CN-Anhui Provincial HighwayProject China 1999 TR TA 200 98 196 S HL SUA DECADE OF ACTION IN TRANSPORT

103P003504 L3748 Hebei/Henan National China 1994 TR TA S L SUP003951 L3854 ID-KALIMANTAN UDP Indonesia 1995 UD TA 136 20 27 S NEV MP034891 L3888 VILLAGE INFRASTRUCTU Indonesia 1995 TR TA 73 25 18 HS L SUP004008 L3984 ID—NUSA TENGGARA DEV. Indonesia 1996 RDV TA 27 20 5 MU UL MP004011 L4007 ID—SULAWESI AGRI AREA Indonesia 1996 RDV TA 27 29 8 MU UL MP004016 L4054 ID-Strategic Urban Rds Indonesia 1996 TR TA 87 81 70 MS L MP039312 L4017 IND-EAST JAVA UDP II Indonesia 1996 UD TA 117 29 34 MS UL MP004026 L4106 ID-Railway Efficiency Indonesia 1997 TR TW 105 100 105 U UL MP036047 L4155 ID-BALI URBAN INFRA. Indonesia 1997 UD TA 110 15 17 MS L MP036053 L4105 ID-SUL2UDP Indonesia 1997 UD TA 155 20 31 U UL NEGP040521 L4100 VILLAGE INFRASTRUCTURE II Indonesia 1997 TR TA 140 21 29 HS L SUP037095 L4306 MALUKU REG. DEV Indonesia 1998 RDV TP 16 9 1 NA NA NAPPP045337 C3453,L4330 ID-KECAMATAN DEV FUND Indonesia 1998 PS TZ 225 21 47 S L SUP003993 L4307 ID-SUMATRA REG’L RDS Indonesia 1998 TR TA 234 91 213P040061 L4290 ID—BENGKULU REGIONALDEVELOPMENT Indonesia 1998 RDV TA 21 10 2P003890 L3749 Semarang Surakarta UrbanDevelopment Project Indonesia 1994 UD MU UL MP004173 L3793 KR-Ports Dev & Environment Korea, Republic of 1995 TR TP 100 92 92 S L MP004175 L3828 KR-PUSAN URB TRANSPORT Korea, Republic of 1995 TR TZ 100 90 90 MS UL SUP004210 C2943 LA-Third Highway ImprovementProject Lao PDR 1997 TR TA 48 98 47 HS L SUP064821 C3481 LA-Road Maintenance Lao PDR 2001 TR TA 25 97 24 S HL SUP041741 C2947 BANKING & ENT-BESAC Mongolia 1997 FSP TZ 10 9 1 U UL MP055446 L4316 EMERGENCY EL NINO DROUGHTRESPONSE Papua New Guinea 1998 RDV TZ 5 48 2 U L MP037079 L4109 PH—AGRARIAN REFORM COMM Philippines 1997 RDV TA 50 35 18 S L SUP040981 L4111 PH-SECOND SUBIC BAY Philippines 1997 PSD TATP 60 40 24 S L SUP051386 L4300 SZOPAD SOCIAL FUND Philippines 1998 SP TA 10 22 2 S NEV MP058842 L4522 MINDANAO RURAL DEVELOPMENTPROJECT Philippines 2000 RDV TA 28 48 13 S NEV SUP052293 C3193 WS-Infrastructure AssetManagement Samoa 1999 TR TATV 14 66 10 S L HP004800 L3968 TH-Highways V Thailand 1996 TR TA 150 98 147 S L SU(Table continues on next page)APPENDIX A: STUDY LOGIC AND STATISTICS

104Table A.7: Completed Projects with Transport Components: Approval Year Fiscal 1995–2006(continued)IBRD/IDA IEG IEGLoan/ Approval IBRD/IDA TR IEG Sustain- institutionalCredit fiscal Sector Comm Transport comm outcome ability developmentProject ID No. Project Name Country year Board a Mode b (US$ m) share (US$ m) rating c rating d rating eP004842 CN013 VN-2nd Hwy Rehab Vietnam 1997 TR TA 196 93 182 MS NEV MP039021 C2929 VN-Rural Transport Vietnam 1997 TR TA 55 98 54 MS L MP004843 C3000 VN-INLAND WATERWAYS Vietnam 1998 TR TP 73 92 67P004833 C3125 VN-URBAN TRANSPT IMPRVT Vietnam 1999 TR TATZ 43 80 34P004832 C2549 Highway Rehab Vietnam 1994 TR TA S L MRegion: Europe and Central AsiaP008267 C2732 RURAL ROADS Albania 1995 TR TA 15 74 11 S L HP008273 C2680 RURAL DEVELOPMENT Albania 1995 RDV TA 6 10 1 S L HP036060 C2888 NATL ROADS Albania 1996 TR TA 25 100 25 MS L MP040818 C3068 DURRES PORT Albania 1998 TR TP 17 97 16 MS L SUP040975 C3066 LAND DEVT Albania 1998 UD TA 10 17 2 S L MP051309 C3164 COMMUNITY WORKS Albania 1999 SP TA 9 20 2 S L SUP068853 C3303 EMG ROAD REPAIR Albania 2000 TR TA 14 79 11 S UL MP070078 C3427 TRADE & TRANS FACIL IN SE EUR Albania 2001 TR TA 8 25 2 MS L MP035765 C2776 HIGHWAY Armenia 1996 TR TA 16 91 15 HS L SUP044829 C3375 TRANSPORT Armenia 2000 TR TATW 40 94 38 S L MP055155 C3107 URG ENV INVST Azerbaijan 1998 ENV TA 20 6 1 MU NEV MP044393 C2905 EMG LANDMINE CLEARANCE Bosnia andHerzegovina 1997 TR 8 0 0 HU HU NEGP045484 CN032 EMG TRNSPT RECON 2 Bosnia andHerzegovina 1998 TR TA 39 99 39 S L MP056192 C3191 LOCAL DEVT Bosnia andHerzegovina 1999 UD TZ 15 28 4 S L MP070079 C3466 TRADE & TRANS FACIL IN SE EUR Bosnia andHerzegovina 2001 TR 11 0 0 S L SUP008315 L3922 RAILWAY REHAB Bulgaria 1996 TR TW 95 100 95 MS NEV SUP070086 L4553 TRADE & TRANS FACIL IN SE EUR Bulgaria 2000 TR 7 0 0 S L SUP067051 L7158 PAL Bulgaria 2003 PSD TW 150 5 8 S L SUP008329 L3869 HIGHWAY SECTOR Croatia 1995 TR TA 80 91 73 U L MA DECADE OF ACTION IN TRANSPORT

105P044457 L4104 EMG TRANS/MINE CLR Croatia 1997 TR TATPTW 102 70 71 S L SUP039161 L4433 RAILWAY MOD & RESTRCT’G Croatia 1999 TR TW 101 65 66 MS L MP070088 L4582 TRADE & TRANS FACIL IN SE EUR Croatia 2001 TR 14 0 0 MS L SUP082278 L7330 PAL Croatia 2006 EP TW 185 20 37P008328 L3760 Emergency ReconstructionProject Croatia 1994 UD TA MS L MP035775 L7008 TRANSPORT Estonia 2000 TR TA 25 95 24 S L SUP008417 C2658 MUN INFRA REH Georgia 1995 UD TZ 18 26 5 S L MP039892 C2809 TRANSPORT Georgia 1996 TR TATW 12 75 9 HS L SUP050910 C2976 MUN DEVT Georgia 1998 UD TZ 21 29 6 S L MP056514 C3129 TRANS MIN RESTRUCT Georgia 1999 TR 2 0 0 S L SUP040556 C3357 ROADS Georgia 2000 TR TA 40 99 40P008494 L3903 BUDAPEST URBAN TRANS Hungary 1995 TR TZ 38 100 38 S L SUP008449 L3032 Second Transport Project Hungary 1989 TR S L MP008465 L3549 Roads Project Hungary 1993 TR TA MS UL MP008511 L3725 Urban Transport Kazakhstan 1994 TR MS UNC SUP050719 C3410 KYRGYZ URBAN TRANSPORTPROJECT Kyrgyz Republic 2001 TR TA 22 99 22P034584 L3964 MUN SERVICES DEVT Latvia 1996 UD TZ 27 61 17 MS UL MP008532 L4145 HIGHWAY Latvia 1997 TR TA 20 99 20 HS HL HP066153 L7007 PSAL Latvia 2000 PS TZ 40 6 2 S L SUP008551 L4084 HIGHWAY Lithuania 1997 TR TA 19 99 19 S L SUP035802 L4481 MUNI DEVT Lithuania 1999 UD TZ 20 25 5 U L MP008407 L3868 TRANSIT FACILITATION Macedonia, FYR 1995 TR TA 24 93 22 HS L SUP050589 L4439 TRANSPORT Macedonia, FYR 1999 TR TATW 32 100 32 MS L MP070089 C3402 TRADE & TRANS FACIL IN SE EUR Macedonia, FYR 2001 TR 9 0 0P044840 C3170 SIF Moldova 1999 SP TA 15 22 3 S L SUP036061 L4080 PORT ACCESS & MGMT Poland 1997 TR TATP 67 98 66 S L SUP035082 L4208,L4209 MUNI FIN Poland 1998 FSP TA 22 25 6 U L MP053796 L4264 FLOOD EMERGENCY Poland 1998 UD TA 200 12 24P058202 L7013 RUR DEVT Poland 2000 RDV TA 120 23 28 S L SUP040795 L7054 RAIL RESTRCT (PKP) Poland 2001 TR 101 0 0P036013 L3976 RAILWAY REHABILITATION Romania 1996 TR TW 120 100 120 HS HL HP065041 L4560 TRADE & TRANS FACIL IN SE EUR Romania 2000 TR 17 0 0 MS HL SU(Table continues on next page)APPENDIX A: STUDY LOGIC AND STATISTICS

106Table A.7: Completed Projects with Transport Components: Approval Year Fiscal 1995–2006(continued)IBRD/IDA IEG IEGLoan/ Approval IBRD/IDA TR IEG Sustain- institutionalCredit fiscal Sector Comm Transport comm outcome ability developmentProject ID No. Project Name Country year Board a Mode b (US$ m) share (US$ m) rating c rating d rating eP008791 L4752 PAL Romania 2005 EP TZ 150 10 15 S L SUP008771 L3593 Transport Project Romania 1993 TR HS L SUP008808 L3706 Highway RehabilitationAnd Maintenance Russian Federation 1994 TR MU NEV MP008806 L3885 URBAN TRANSPORT Russian Federation 1995 TR TZ 329 97 319 S L MP008827 L3850 HOUSING Russian Federation 1995 UD TA 400 17 68 MU UL MP035764 L3990 BRIDGE REHABILITATION Russian Federation 1996 TR TA 350 93 326 MS L MP042720 L4144 ST PETERSBURG REHAB Russian Federation 1997 UD TA 31 14 4 MU NEV MP050491 L4261 SAL 2 Russian Federation 1998 EP TP 800 13 104 U L MP042722 L4427 HWY REHAB & MAINT 2 Russian Federation 1999 TR TA 400 85 340 NR NR NRP053386 C3037 POST CNFLT RECONSTRUCTION Tajikistan 1998 TR TA 10 52 5 S UL MP059055 C3123 EMG FLOOD ASST Tajikistan 1999 UD TA 5 68 3 U UL NEGP038091 L4048,L4049 ROAD IMPRVMT & TRAFFICSAFETY Turkey 1996 TR TA 250 94 235 MS L MP058877 L4388 EMGY FLOOD RECOVERY Turkey 1999 UD TA 369 6 22 S L MP034083 L4170 URBAN TRANSPORT Turkmenistan 1997 TR TZ 34 68 23 MU UL NEGP034581 L3985 HOUSING Ukraine 1996 UD TA 17 10 2 NR NR NRP050508 L4547 URBAN TRANSPORT Uzbekistan 2000 TR TZ 29 98 28Region: Latin America and the CaribbeanP006018 L3877 AR PROV DEVT II Argentina 1995 PS TA 225 20 45P006060 L3860 AR MUNIC DEVT II Argentina 1995 UD TZ 210 44 92 S L MP035495 L3957 SOCIAL PROTECTION Argentina 1996 SP TA 152 4 6 S L SUP005980 L4093 AR PROV ROADS Argentina 1997 TR TA 300 97 291P055935 L4273 EL NINO EMERGENCYFLOOD PROJECT Argentina 1998 WS TZ 42 44 18 S UL MP052590 L4295 AR NAT HWY REHAB&MAINT Argentina 1998 TR TA 450 97 437P006058 L4398 AR-Social Protection 4 Argentina 1999 SP TA 91 15 14P044447 L4578 AR Catamarca Provincial Reform Argentina 2001 PS TA 71 8 6P069913 L4634 AR Santa Fe Provincial Reform Argentina 2002 PS TA 330 7 23A DECADE OF ACTION IN TRANSPORT

107P039292 L4142 BZ- SOCIAL INVEST. FUND Belize 1997 SP TA 7 15 1 MU L MP040150 L4575 BZ ROADS AND MUNICIPALDRAINAGE PROJECT Belize 2001 TR TA 13 50 7 S UL MP037005 C2647 REGULATORY REF & CAP Bolivia 1995 PS TV 15 15 2 S L SUP006202 C2772 RURAL COMMUNITIES DE Bolivia 1996 RDV TA 15 9 1 S L SUP055974 C3057 BO EL NINO EMERGENCY Bolivia 1998 TR TA 25 19 5 S UL MP057030 C3143 BO REG REFORM ADJ CREDI Bolivia 1999 PSD TZ 40 8 3 S L SUP055230 C3235 BO ABAPO-CAMIRI HIGHWAY Bolivia 1999 TR TA 88 99 87P006564 L3916 BR BELO H M.TSP Brazil 1995 TR TATW 99 93 92 MS L SUP035717 L3917 RURAL POV. (BAHIA) Brazil 1995 RDV TA 105 30 32 S L SUP038882 L3915 BR RECIFE M.TSP Brazil 1995 TR TATWTZ 102 98 100 MS L SUP038884 L3918 RURAL POV.- CEARA Brazil 1995 RDV TA 70 23 16 HS L SUP038885 L3919 RURAL POV.-SERGIPE Brazil 1995 RDV TA 36 23 8 S L SUP040028 L4046 RAILWAYS RESTRUCTURG Brazil 1996 TR TW 350 99 347 S L SUP037828 L4060 BR (PR)R.POVERTY Brazil 1996 RDV TZ 175 22 39P006562 L4140 Bahia Municipal Inf. Dev’t. andMgm’t. Brazil 1997 UD TZ 100 13 13 S L SUP038896 L4120 R.POVERTY(RGN) Brazil 1997 RDV TA 24 22 5 HS L SUP042566 L4122 R.POVERTY(PE) Brazil 1997 RDV TA 39 22 9 S L SUP043871 L4121 (PIAUI)R.POVERTY Brazil 1997 RDV TA 30 23 7 S L SUP039196 L4139 BR RGS ST.REF Brazil 1997 PS TA 125 9 11 MS L MP048870 L4189 BR MT STATE PRIV. Brazil 1997 PSD TA 45 16 7 S L SUP006532 L4188 BR FED HWY DECENTR Brazil 1997 TR TA 300 92 276P034578 L4165 BR RGS Highway MGT Brazil 1997 TR TA 70 77 54P006559 L4312 BR (BF-R)SP.TSP Brazil 1998 TR TZ 45 86 39 HS HL SUP040033 L4318 MG STATE PRIV. Brazil 1998 PSD TA 170 10 17 NR NR NRP051701 L4252 BR MARANHAO R.POVERTY Brazil 1998 RDV TA 80 20 16 S L SUP039197 L4211 BR RJ ST.PRIV. Brazil 1998 PS TZ 250 100 250 S L MP050875 L4626 BR Ceara Rural Poverty ReductionProject Brazil 2001 RDV TA 38 25 9P057649 L4623 BR Bahia Rural Poverty ReductionProject Brazil 2001 RDV TA 54 25 14 S L SUP080827 L7218 BR Loan for Sust. and EquitableGrowth Brazil 2004 PSD TZ 505 25 126 S L SU(Table continues on next page)APPENDIX A: STUDY LOGIC AND STATISTICS

108Table A.7: Completed Projects with Transport Components: Approval Year Fiscal 1995–2006(continued)IBRD/IDA IEG IEGLoan/ Approval IBRD/IDA TR IEG Sustain- institutionalCredit fiscal Sector Comm Transport comm outcome ability developmentProject ID No. Project Name Country year Board a Mode b (US$ m) share (US$ m) rating c rating d rating eP006378 L3547,L3548 Santa Catarina State HighwayManagement Project Brazil 1993 TR TA S L SUP006661 L3833 CL THIRD RD SCTR Chile 1995 TR TA 120 100 120 S L SUP006676 L3974 CL SECANO AG DEV I Chile 1996 RDV TA 15 10 2 S L MP082412 L7315 CL -Santiago Urban Transport Adj Chile 2006 TR TZ 30 100 30P006872 L4021 CO Urban Transport Colombia 1996 TR TATZ 65 91 59 HS HL HP006861 L4345 CO URBAN INFRASTRUCTURE Colombia 1998 UD TZ 75 20 15 S L SUP046031 L4371 CO MAGDALENA MEDIO Colombia 1998 SDV TA 5 10 1 HS L SUP039082 L4370 TOLL-ROAD CONCESSION Colombia 1999 TR TA 137 100 137 U UL NEGP081397 L7309 CO Prog Dev Policy Ln for Sust.Dev Colombia 2005 ENV TZ 150 10 15P006856 L3157 Second Rural Roads SectorProject Colombia 1990 TR TA S UNC MP006873 L3453 Third National Highway SectorProject Colombia 1992 TR TA S UNC SUP077680 C3610,L7099 Emergency Recovery Project Dominican Repub 2002 UD TPTV 3 60 2 S L MP078841 C3851 DM ERSO Dominican Repub 2004 PO TP 3 10 0 S L SUP035722 L4127 DO NATIONAL HWY. PROJ. Dominican Repub 1997 TR TA 75 91 68 MS UL MP063201 0 DO Hurricane Georges EmergencyRecovery Dominican Repub 1999 PSD TA 111 20 22 S L MP040198 L4407 GT FIS II Guatemala 1999 SP TA 50 12 6 MS NEV MP054462 L4432 GT LAND FUND (APL) Guatemala 1999 RDV TA 23 13 3P007318 C2691 RD MAINT & RHB Haiti 1995 TR TA 50 90 45 HU UL NEGP031828 C2670 EMERGENCY ECONOMIC R Haiti 1995 PSD TZ 40 20 8 HS L SUP089873 C4029,CH142 HT Economic Governance ReformAdj. Ope. Haiti 2005 EP TZ 61 12 7P007388 C2458 Transport Sector RehabilitationProject Honduras 1993 TR TATV 65 83 54 S L SUP007387 C2816 HN PUB SEC MOD SAC Honduras 1996 PS TV 55 12 7 MU L SUP064083 C3159 HO HURRICANE EMERGENCY Honduras 1999 PSD TZ 200 20 40 S L NEGA DECADE OF ACTION IN TRANSPORT

109P064895 C3443 HN FIFTH SOCIAL INVESTMENTFUND PROJECT Honduras 2001 SP TA 60 25 15P074758 C3941 HN PRSC Honduras 2004 PO TZ 59 10 6 S NEV SUP039029 L4088 JM- SOC. INVEST. FUND Jamaica 1997 SP TA 20 20 4 S UL MP007702 L3790 SECOND DECENTRALIZATION Mexico 1995 PSD TA 500 33 165 S L SUP040685 L3937 INFRA. PRIVATZTN TA Mexico 1996 PSD TZ 30 30 9 S L SUP043163 L4206 FEDERAL ROADS MODZTN Mexico 1997 TR TA 475 89 423 NR NR NRP064887 L7038 MX DISASTER MANAGEMENT (ERL) Mexico 2001 ENV TZ 404 23 93 HU HU NEGP070479 L7043 MX Edo.de Mexico StructuralAdjustm Loan Mexico 2001 PS TA 505 10 51 MS L MP065779 L7042 MX FEDERAL HIGHWAYMAINTENANCE PROJ. Mexico 2001 TR TA 218 98 214P007694 L3543 Transport Air QualityManagement for Mexico CityMetro Area Mexico 1993 TR S L SUP007723 L3628 Highway Rehabilitation andSafety Project Mexico 1993 TR TA S NEV MP007788 C2871 ROAD REHAB & MAINT Nicaragua 1996 TR TA 25 84 21 HS L SUP007790 C2918 NI RURAL MUNICIPALITIES Nicaragua 1997 RDV TZ 30 19 6 MS NEV SUP053705 C3085 NI TRANSPORT II Nicaragua 1998 TR TA 47 82 39 HS L SUP064084 C3158 NI HURRICANE EMERGENCY Nicaragua 1999 PSD TZ 50 20 10 S L NEGP007837 L4191 PA—FIS Panama 1997 SP TA 28 10 3 MU NEV MP053706 L4393 SECOND ROADS REHAB Panama 1999 TR TA 85 97 82 NR NR NRP037047 L3962 RURAL RDS. REHAB & M Peru 1996 TR TA 90 96 86 HS L SUP040125 L4068 PE-FONCODES II Peru 1997 SP TA 150 2 3 S L MP054667 L4250 EL NINO EMERGENCY LN Peru 1998 TR 150 0 0 MU L SUP082871 L7203 PE Program. Decent. & Competitiveness Peru 2004 PS TP 150 10 15 S L SUP083949 L7267 PE PROGRAMATIC REFORM FORGROWTH II Peru 2005 PSD TZ 100 25 25P062668 L4418 St. Kitts & Nevis—DisasterManagement St. Kitts and Nevis 1999 PSD TZ 9 20 2 S L SUP077684 L7101 Emergency Recovery Project St. Kitts and Nevis 2002 UD TPTV 4 59 3P070430 C3151,L4419 Saint Lucia—DisasterManagement St. Lucia 1999 PSD TZ 6 20 1 S L SU(Table continues on next page)APPENDIX A: STUDY LOGIC AND STATISTICS

110Table A.7: Completed Projects with Transport Components: Approval Year Fiscal 1995–2006(continued)IBRD/IDA IEG IEGLoan/ Approval IBRD/IDA TR IEG Sustain- institutionalCredit fiscal Sector Comm Transport comm outcome ability developmentProject ID No. Project Name Country year Board a Mode b (US$ m) share (US$ m) rating c rating d rating eP054939 C3277,L4508 LC- POVERTY REDUCTION FUND St. Lucia 2000 SP TA 3 10 0 MS NEV MP077687 C3612,L7102 Emergency Recovery Project St. Lucia 2002 UD TPTV 6 56 4P076822 C3613,L7103 Emergency Recovery Project St. Vincent 2002 UD TP 3 100 3P039203 L4204 UY FOREST PROD.TSP Uruguay 1997 TR TATPTW 76 92 70P049267 L4395 UY TRANSPORT II Uruguay 1999 TR TA 65 94 61 S L SURegion: Middle East and North AfricaP004907 L3839 DZ-HIGHWAYS VI Algeria 1995 TR TA 130 71 92 U UL MP038695 L3813 DZ-MASCARA EMERG.RECONS Algeria 1995 UD TA 51 14 7 S L MP004978 L4006 SOCIAL SAFETY I Algeria 1996 SP TA 50 22 11 S L SUP043724 L4143 DZ-RURAL EMPLOYMENT Algeria 1997 RDV TA 89 4 4 S L SUP042940 L4361 DZ-LOW INCOME HOUSING Algeria 1998 UD TA 150 25 38 U UL NEGP069947 L7023 DZ-TEERP(Temouchent Emerg.Earthquake) Algeria 2000 UD TA 83 2 2P069930 C3391 DJ-INTL. ROAD CORRIDOR REHAB.PROJECT Djibouti 2000 TR TA 15 91 14 S L MP057704 C3074 PORT SECTOR REFORM Egypt, Arab Rep of 1998 TR 2 0 0 NR NR NRP074075 L7161 EG—Second Matruh ResourceMgmt. Proj. Egypt, Arab Rep of 2003 RDV TA 12 10 1P049581 L4215 COMMUNITY INFRA. DEV. Jordan 1998 UD TA 30 24 7 S L SUP035997 L4214 JO-SECOND TOURISM DEV. Jordan 1998 UD TA 32 45 14 MS L MP045676 L4482 Jordan—ERDL III Jordan 1999 EP TZ 120 11 13 MS L SUP034037 L4092 LB: AGRI. INFRA. DEVEL. Lebanon 1997 RDV TA 31 32 10 S L MP038674 L4065 LB-NATIONAL ROADS Lebanon 1997 TR TA 42 91 38 MS UL MP005489 L3901 MA-SECONDARY ROADS Morocco 1995 TR TA 58 87 50 S L MP041303 L3935 EMERG. DROUGHT RECOV Morocco 1996 RDV TA 100 23 23 HS L SUP043725 L4128 MA-RAILWAY RESTR & PRIV Morocco 1997 PSD TW 85 100 85 S L HP005523 L4231 MUNICIPAL FINANCE II Morocco 1998 UD TA 70 25 18 S L MP005519 L4426 LAKHDAR WATERSHED MG Morocco 1999 RDV TA 4 11 0 S NEV MP052247 L4464 MA-PILOT FISHERIES DEV. Morocco 1999 RDV TP 5 52 3 MS L MA DECADE OF ACTION IN TRANSPORT

111P005524 L4402,L4403 FES MEDINA REHABILITATION PROJECT Morocco 1999 UD TA 14 52 7P005749 L3840 TUNISIA—RURAL ROADS PROJECT Tunisia 1995 TR TA 52 96 49 S L SUP046832 L4202 TN-MUNICIPAL DEV. II Tunisia 1997 UD TZ 80 32 26 MS L MP042287 L4069 ECAL I Tunisia 1997 FSP TP 75 28 21 S L MP043700 L4357,L4358 TN-TRANSPORT SECTORINVESTMENT PROJECT Tunisia 1998 TR TPTW 50 92 46P005733 L3691 Northwest Mountainous AreasDevelopment Project Tunisia 1994 ENV TA S L SUP005806 C2177 Multi-mode Transport Project Yemen, Rep. of 1991 TR TA MS L SUP049735 C3298 Privatization Support Project Yemen, Rep. of 2000 PSD Not Not NotAppli- Appli- Applicablecable cableP043109 C2878 PUBLIC WORKS PROJECT Yemen, Rep. of 1996 UD TA 25 10 3 S L SUP041267 C2819 RY-TRANSPORT REHABILITATION Yemen, Rep. of 1996 TR TATV 37 95 35 MS L MP048522 C2932 EMERGENCY FLOOD REHABILITATIONPROJECT Yemen, Rep. of 1997 RDV TA 30 24 7 S L SUP060132 C3168 RY Public Works II Yemen, Rep. of 1999 UD TA 50 23 12 HS L SUP068830 C3353 RY-Second Social Fund for Dev Yemen, Rep. of 2000 SP TA 75 10 8Region: South AsiaP077533 CH009 Emergency Community EmpowermentProject Afghanistan 2002 SDV TA 42 23 10 S NEV SUP009509 C2569 Jamuna Bridge Project Bangladesh 1994 TR TA 200 99 198 HS HL MP009518 C2927 Second Rural Roads & MarketsImprovement Bangladesh 1997 TR TA 133 89 118 S L SUP037294 CN043 Third Road Rehabilitation &Maintenance Bangladesh 1999 TR TA 273 86 235 MS L MP009524 C3163 Dhaka Urban Transport Bangladesh 1999 TR TA 177 75 133 MU NEV MP010522 C2733 Assam Rural Infra India 1995 RDV TA 126 39 49 S L SUP039935 C2838,L3992 ILFS-Private Infrastructure Finance India 1996 PSD TATP 205 49 100 MU L MP009995 L4192 ANDHRA PRADESH STATE HIGHWAYPROJECT India 1997 TR TA 350 97 340 S L MP045600 L4114 TA ST’S RD INFRA DEV India 1997 TR 52 0 0 S L MP049301 C2950,L4156 A.P. EMERG. CYCLONE India 1997 PSD TA 150 25 38 U L SUP035824 C3106,L4365 Div Agri Support India 1998 RDV TA 130 21 27 S L SU(Table continues on next page)APPENDIX A: STUDY LOGIC AND STATISTICS

112Table A.7: Completed Projects with Transport Components: Approval Year Fiscal 1995–2006(continued)IBRD/IDA IEG IEGLoan/ Approval IBRD/IDA TR IEG Sustain- institutionalCredit fiscal Sector Comm Transport comm outcome ability developmentProject ID No. Project Name Country year Board a Mode b (US$ m) share (US$ m) rating c rating d rating eP049385 C3103,L4360 AP ECON RESTRUCTURIN India 1998 HE TA 543 21 114P050637 L4478 TN URBAN DEV II India 1999 UD TA 105 17 18 MS L SUP041264 C3243,L4492 Wtrshd Mgmt Hills II India 1999 RDV TA 135 3 4 S L SUP059149 C3617,L4652 KARN SAL II India 2002 EP TA 100 3 3 MS L SUP010509 C3008 MULTIMODAL TRANSIT Nepal 1998 TR TATZ 24 89 21 MU L SUP045053 C3215 RURAL INFRA LIL Nepal 1999 TR TA 5 74 4 MS L SUP010478 C2829 NWFP- COMMUNITY INFRA Pakistan 1996 UD TA 22 22 5 MU UL MP049791 C3248 POVERTY ALLEVIATION FUND Pakistan 1999 FSP TA 90 15 14 HS L SUP077834 C3687 NWFP Structural Adjustment Credit Pakistan 2003 EP TA 90 5 5 MS L MP010277 L2814 Fourth Highway Project Pakistan 1987 TR TA S L SUP010352 L3241 Transport Sector Project Pakistan 1990 TR MS L SUP010375 L3335 Karachi Port ModernizationProject Pakistan 1991 TR TP S L SUP058070 C3301 North-East Irrigated Agriculture Project Sri Lanka 2000 RDV TA 27 30 8 S L SUP010363 C2183 Third Roads Project Sri Lanka 1991 TR TA MS UL MP010420 C2495 Colombo Urban Transport Project Sri Lanka 1993 TR MU UL NEGA DECADE OF ACTION IN TRANSPORTSource: World Bank data.Note: All data for portfolio review is from July 1, 2006. The projects for which a field assessment was done by IEG and PPARs prepared are listed in bold and italics. FY = fiscal year.a. EMT = energy, mining, and telecommunications; ENV = environment; EP = economic policy; PS = public sector; PSD = private sector development; RDV = rural development; SP = social protection; TR = transport; UD = urban development.b. TA = roads and highways; TP = ports, waterways, and shipping; TV = aviation; TW = railways; TZ = general transportation.c. HS = highly satisfactory; HU = highly unsatisfactory; MS = moderately satisfactory; MU = moderately unsatisfactory; NR = no rating; S = satisfactory; U = unsatisfactory.d. HL = highly likely; U = unlikely; HUL = highly unlikely; L = likely; NA = not assessed; NEV = nonevaluable; UL = unlikely; UNC = uncertain.e. H = high; M = medium; NEG = negligible; NR = no rating; SU = substantial.

Table A.8: Alternative Degrees of Private Sector Responsibility for Provision of Transport Infrastructure/Services113Policy andPlanningManagementSources ofoutsidefinanceExamples(Developingcountries initalics)National level: Private participation in regulatory/oversight committees (e.g., Planning/Regulatory Commissions, Roads Board, Facilitation Committees)Local level: Stakeholder participation in planning and monitoring committees for services, projects, expendituresGovernmentdepartmentBudgetsovereignborrowingaidNew Zealand:Railinfrastructure(2003)CommunityBudgetself-helpaidSweden:Most privateroadsNumerous localroads built underCommunityDrivenDevelopmentinitiatives indevelopingcountriesStatecorporationBudgetbanksaidbondsUK: HighwaysAgency (1994)New Zealand:Air NZ (2001)Germany:Railways (DB)(1993)Chile: PortCorporations(1997)Colombia:Bogota: Transmileniobus rapidtransit co. (1999)India: Ennore Port(2001)ManagementcontractBudgetaidZambia:Railways (1998)Uganda:Road AgencyFormationUnit—RAFU(1998)JointventureBudgetequitybondsbanksChina: ProvincialExpresswayDevelopmentCompanies(1998–)LeaseEquitybanksbondsaidUSA: LasVegas Transit(1993)Australia:StateRailways(1997–)Australia:main airports(1996–)Mexico:Railways(1997)Mozambique:Maputo Port(2003)Design, build,finance andoperateEquity banks(limitedrecourse)budget, aidUK: Trunk RoadUpgrades(1995–)UK: LondonUndergroundinfrastructure(2002)UK: Portsmoutharea roadmaintenance(2003)Portugal:motorways(1996–)Greece:Athens Airport(1995)Build, operateand transferEquity banks(limitedrecourse)budget, aidUSA California:SR-91 (1994)Australia: Urbantoll roads(1987–)France: Millauviaduct (2001)Bolivia: Airports(1996)India: NhavaSheva containerterminal(1997)South Africa:Road concessions(1997–)FranchiseEquitybanks(limitedrecourse)Norway BusesUK: TrainOperating Cost(1995–)UK: Bus QualityContracts(1998–)AustraliaMelbourne:Public Transport(1999)Colombia Bogota:Bus cos.(2001–)PrivatecompanyEquitybanksbondsUK: Railtrack(1996–2002)New Zealand:Main airports(1998)South AustraliaPorts (2001)Italy:AutostradeSpa (1999)Germany:FrankfurtAirport (2003)Mexico: ASUR(southeast)airports (1999–)Source: World Bank data.Note: Budget = national government budget; Equity = risk capital subscribed by shareholders in venture; Aid = foreign aid, from IFIs or bilateral sources; Banks = loans from domestic or foreign commercial banks (including syndicated loans);Bonds = normally domestic bond issues (where local capital market sufficiently developed). The table is intended to apply to transport services as well as to transport infrastructure construction and maintenance. The former, including trucking enterprises,bus companies, airlines, independent train operators, shipping companies, stevedores, and other providers of individual port services, are often already in the private sector and would therefore normally belong in the last column on theright.APPENDIX A: STUDY LOGIC AND STATISTICS

A DECADE OF ACTION IN TRANSPORTTable A.9: Active Projects with Transport ComponentsApproval Year Fiscal 1995–2006Number of IBRD/IDA TRRegion Projects Commit. ($m)Africa 80 3,187East Asia and Pacific 71 5,412Europe and Central Asia 37 1,808Latin America and the Caribbean 48 2,510Middle East and North Africa 24 826South Asia 47 5,663Total 307 19,406Source: World Bank data.Note: Active commitments as at July 1, 2006.114

APPENDIX B:BACKGROUND PAPER SUMMARIESGlobal Transport Financing TrendsIntroductionThe public and private sectors are intrinsicallyinvolved in the provision of both transport infrastructureand services, but the dividing line betweenpublic and private varies significantly fromcountry to country and among the different modesof transport. These variations reflect a wide rangeof factors, such as the technologies available, thescale of their capital requirements, changing viewsof the relative importance of systemwide planningand management (as against customer responsivenessin improving performance), the stock ofmanagerial and technical skills, government finances,and—last but not least—each country’shistorical experience and inherited institutions.The Bank’s 1994 World Development Report(WDR) (World Bank 1994b) reviewed the performanceof infrastructure support and deliveryglobally; it concluded that in many developingcountries greater reliance should be placed on theprivate sector for direct provision of infrastructureand services. Governments, it proposed, shouldconcentrate more on creating and maintaininglegal and regulatory frameworks to attract privateproviders but, at the same time, safeguard the interestsof the poor, improve environmental conditions,and coordinate cross-sector interactions.This IEG summary of international trends in privatesector participation in transport uses as apoint of departure both the Organisation for EconomicCo-operation and Development (OECD)and Latin American performance. OECD has takenthe lead in private sector development in transport,and Latin America has shown the most progressin the developing world. The summary gives a briefaccount of developments in the other Regionsand reaches some tentative conclusions.OECD Leaders in ReformRecent OECD research concluded that, at the endof the 20th century, the transport sector was mostliberalized in four of its member countries: Australia,New Zealand, Britain, and the United States.But the past 10 years have seen significant differencesamong them in the degree of private participationin the provision of infrastructure andservices, as well as the extent to which it haschanged. The best available figures suggest that theprivate share of total annual investment in transport(excluding vehicles for personal use) mayhave risen slightly in the United States through the1990s to about 20 percent and strongly in Australia,to as much as 40 percent in the early 2000s.The biggest change in the volume of private investmentgoing into transport has been with regardto trunk road construction and maintenance.Starting from the mid-1980s, Australia has successfullycompleted nearly 10 urban motorwaybuild, operate, and transfer projects (BOTs), withtraffic risk taken by the private investors. Britainhas had one project of this type, more than adozen design, build, finance, and operate (DBFO)projects for upgrading the national core network,and a number of smaller projects along similarlines offered by local government bodies. A fewAmerican states, including California, Texas, andVirginia, have also been active participants in federalprograms to support state public-private partnership(PPP) initiatives for the construction/operation of toll roads and lanes.115

A DECADE OF ACTION IN TRANSPORTThe transport mode that has seen the largest shiftfrom government to private sector responsibilityis mainline rail. Government-owned railway facilitieswere sold to the private sector, virtually in theirentirety, by New Zealand in 1993 and the UnitedKingdom in 1995–97. The Australian governmentand four Australian states sold their railways inmajor part between 1997 and 2002. Numerousfollow-on mergers—as were also important overthe last decade in the traditionally private U.S.railways—meant that by 2004, main freight railservices in Australasia were provided by two majorprivate transport/logistics groups. In Britain andNew Zealand, however, the intended extent ofgovernment withdrawal was rolled back in theearly 2000s, with the public sector again takinglarger responsibility for track infrastructure.In air transport, the main airlines have been privatelyowned at least since the late 1980s in all fourcountries, as have most of the principal airportsin Britain. Major trends of the past decade havebeen the rise of privately owned low-cost carriersand the sale of all main airports in New Zealandand Australia. Low-cost carriers have been an importantcounterweight to the concentration ofU.S. airlines through mergers and now account fornearly 25 percent of scheduled air traffic in theUnited States. They have also enjoyed very rapidtraffic increases in the United Kingdom, particularlysince deregulation of the European Union(EU) internal traffic market in 1997, and in Australasiasince Virgin Blue was established in 2000.The resultant collapse of Australia’s second conventionalairline, Ansett, led to the resumption ofmajority government ownership of Air NewZealand (its principal owner at the time).The past decade has also seen important changesin the organization of urban public transport inthree of the four countries—but not in the UnitedStates, despite increasing concern there abouthigh costs and low efficiency of public sector operators.Less than 10 percent of U.S. regular busservices are competitively tendered and fewerthan 30 percent of school bus services. Dominanttrends in Australia and New Zealand, in contrast,have been toward competitive contractingof route or area franchises, following the patterninitiated with London bus services in the middle1980s. 1 Increasing use has been made in all threecountries of “quality contracts,” under which theprivate operators commit to deliver agreed standardsof service in return for government commitmentsto improve infrastructure. Experiencewith new fixed-rail systems, for which significantcapital subsidies have been provided to publicprivatepartnerships, particularly in the UnitedStates, has often been disappointing in terms oftraffic attracted.Other Main OECD CountriesOECD analysis of other main member economiesbeyond the four just discussed concluded thatthey too had considerably liberalized their transportmarkets in the last two decades of the 20thcentury. Those countries’ progress was at a somewhatlower level, and some EU countries laggedbehind others. Private participation in the provisionof transport has also grown over the past 10years in the same three ways—opening of marketspreviously served by public monopolies, sale ofgovernment-owned infrastructure, and formationof PPPs to develop new infrastructure. But thepace of change has been slower, and less attentionhas sometimes been given to the accompanyingincreased private sector role with measures toensure sustained competition among privateproviders.The most widespread involvement of the privatesector in the operation of transport infrastructure,and the provision of some of it, in these countriesis probably in ports. Government initiatives inmany European countries and Canada in the late1980s and early 1990s modified the privileged positionof dockworkers, decentralized port management,and made ports more financiallyautonomous. These changes opened the way formuch increased private investment. Major portshave largely adopted the landlord port model,and a reasonable degree of competitive pressureson private operators appears to have been maintained.Japan, in contrast, has retained strong centralizedregulation, with resultant high port charges.The obstacles that traditional rules and practicespose to effective competition in the small ports ofEurope also remain a serious concern.116

APPENDIX B: BACKGROUND PAPER SUMMARIESPrivate sector involvement in the managementand financing of roads has varied greatly amongthese countries, but it has been increasing over thepast decade. In continental Western Europe some10,500 kilometers (km) of tolled motorways (abouthalf the area’s tolled network and one-fifth of allits motorways) are now under private management,mainly in Italy, Portugal, and Spain. Some untolledsections, especially in Portugal and Spain,have also been built under DBFO concessions.France has awarded a number of major new BOTcontracts on an open competitive basis in the past5 years.The past decade has also seen considerable movementin arrangements for the provision of urbantransport services, with important further effectsexpected in coming years. Aside from Japan, theScandinavian countries, and, to a lesser extent, Portugaland Spain, virtually all the other continentalEuropean countries had their public transportalmost entirely provided in the early 1990s bypublic sector agencies; the same was the case, andremains so, in Canada. Promoted by the EuropeanCommission, change spread first to the Netherlandsand then to increasing numbers of towns inGermany and Italy. Local rail services have beenincreasingly offered as concessions to independentoperators in some German states. Experimentshave been under way in Norway with bettertargeted performance-based bus contracts. Frenchtowns have been transferring more risks to concessionairesfor bus services, and foreign companieshave for the first time won some of thecontracts.Japan’s railways were successfully restructuredand privatized in 1987, and Canadian Nationalwas sold on the stock exchange in 1995. Althoughthe continental European railways remain in thepublic sector, most of them have been undergoingimportant reforms and reorganizations tostrengthen aspects of their commercializationand to reduce costs. The European Commissionhas strongly emphasized the separation of infrastructureand operations, initially in accountingterms and subsequently organizationally. Independentoperators, besides providing urban passengerservices, as in some areas of Germany,have also begun to develop long-distance freightservices, as in Germany, Italy, Sweden, and Switzerland.Major PPP projects, supported by substantialpublic capital contributions, have been initiatedfor improving intercountry rail links, such as thehigh-speed lines in the Netherlands and across thePyrenees between France and Spain.Low-cost scheduled air services began to developin continental Europe following the 1997 deregulationof the EU internal market. Market pressureshave led to some important mergers amongthe previously excessive number of national flagcarriers, and most of the major airlines are nowtraded on the stock exchange. About a dozen ofthe more important European airports have beenpartially privatized, principally those in Austria,Denmark, Germany, Italy, and Switzerland. Athens’new airport was built under a 30-year DBFO concessionsigned in 1995 with large capital supportfrom the EU and the Greek government.Latin America and the CaribbeanThe past decade has seen a larger increase in therelative role of the private sector in transport infrastructurein this Region than in any other. All thelarge countries except Venezuela have increasedprivate participation in most of the main transportmodes, and more than half of the medium-sizecountries have been almost equally active. Someestimates, based on figures for the Region’s largereconomies, suggest that the private share of totalinvestment in transport in the 1990s averaged asmuch as 50 percent. This figure mainly reflects asharp reduction from earlier years in the volumeof public investment in the sector.RoadwaysThe largest volume of private investment has beenin maintenance, rehabilitation, or construction ofroads that were tolled on completion. Some aremotorways, but most are relatively high-gradetrunk roads. A survey undertaken by the United Nations(UN) Economic Commission for Latin Americaand the Caribbean indicated that by early 2003Latin America had a total of some 35,000 km ofroads under concessions to private operators, includingnearly 11,000 km in Argentina, 10,000 kmin Brazil, 6,000 km in Mexico, and about 2,400 km117

A DECADE OF ACTION IN TRANSPORTeach in Chile and Colombia, as well as shortstretches in many of the smaller countries.Besides these changes at the management level,Latin America has also been at the forefront of experimentationwith improved methods for involvingthe private sector at the execution level,especially for standard rehabilitation and maintenance.For main roads with traffic insufficient towarrant conventional tolls, Argentina introducedin the middle 1990s multiyear rehabilitation andmaintenance contracts. Payment was awarded tothe contractor according to the road standard attainedrather than for the individual maintenanceinterventions undertaken. Such performancebasedcontracting rapidly attracted internationalinterest, and similar programs were started bythe highway departments of several other LatinAmerican countries, as well as in other Regions.RailwaysOver the 1990s almost all railways in the Regionwere concessioned to private operators, startingwith Argentina’s freight services in 1991–93 andits more substantial Buenos Aires passenger operationsin 1994–95. Direct public sector managementof railways is now limited principally topassenger services in a few metropolitan areas andthe overall network in two or three smaller countriessuch as Cuba and Uruguay.The facilities were normally concessioned as integratedoperations, including track as well as services(predominantly freight). The main focus wason devising viable regional packages of the existingassets—and access rights for adjoining concessionaires—thatwould at the same time facilitate theoffer of alternative services to shippers, especiallyat major traffic nodes. As in Australia, the initial concessionshave been followed by some importantmergers (in this Region, mostly international),which were considered consistent with marketpotentials and not inimical to competition.PortsWhereas railway reform was often motivated by thedesire to reduce the fiscal burden of operating subsidies,the main object of port reform has been toenable countries to draw the full benefit from internationaltrading possibilities. Latin America hasa long tradition of privately built and owned industrialports, largely for export of bulk commodities.They have continued to expand innumber and generally to function well. The focusof the reforms has been rather on the commonuserports, which, in the early 1990s, typically stillsuffered from highly centralized management,public monopoly in the provision of all services,and restrictive labor practices.In countries such as Argentina, Colombia, andMexico, the main common-user ports have beentransformed into landlord operations. Under thismodel, major terminals are provided and run byglobal or Latin American port-operating companies,and the full range of minor services are offeredby local private enterprises. But in somesmall countries, as in Central America, commonuserports and port services remain largely publicmonopolies. Most countries lie between theseextremes and are still in the process of transition.Public TransportIn Latin America, as in most developing regions,public transport continues to account for a highproportion of urban residents’ movements (typicallyupward of 50 percent in major cities) comparedwith OECD countries. The service is providedmainly by privately owned and operated buscompanies, loosely regulated.Among efforts to cope with increasing traffic congestionresulting from the growth of populationand private cars, several Latin American countrieshave been leading busway developers. An importantrecent initiative in this direction is the startof a citywide network (more than 50 km now ofan eventual 400 km completed) in Bogota. Thehigher and more reliable service standards requiredby the private bus companies under stricterfranchises, combined with public sector action toimprove traffic regulation and build and operatethe dedicated infrastructure, are yielding majorimprovements.AirwaysIn air transport, liberalization has continued, andmarkets, both domestic and international, have118

APPENDIX B: BACKGROUND PAPER SUMMARIESshown strong (though fluctuating) growth. Mostcarriers are now in the private sector. Various experimentshave been made with increased privateparticipation in management and financing of airports,and they have shown some tendency to accelerate.Main airports in Chile were concessionedindividually in the second half of the 1990s andthose in Argentina, Bolivia, and Mexico in multiairportgroups. BOT contracts for upgrading of individualairports have also been made in 10 othercountries.Other RegionsIn the five Bank operating Regions covering Africa,Asia, Europe, and the Middle East, private participationin provision of transport infrastructurehas so far been more limited than in Latin Americaand the Caribbean. In each of the five Regions,about one-third of the countries undertookone or more transport projects involving privatecapital over the course of the past 10 years. Withfew exceptions, the breadth of private involvementacross different modes within each country hasalso been more limited than in Latin America andthe Caribbean.In the wake of the Asian financial crisis of 1996–97and following an earlier initiative that had yieldedlimited results, the Republic of Korea revised legislationgoverning private participation in themanagement and financing of infrastructure. Proceduresfor bid awards were made more transparent,and tax incentives and generous revenueguarantees were introduced. In 1998 a port containerterminal was offered for the first time forforeign investment.Since then, projects aggregating some $25 billion–$30billion (including government grant contributionsaveraging 25 percent) have been initiated,most of them transport works, includingtoll tunnels and highways, port developments,and rail access to Incheon airport. The revenueguarantees proved costly and were revised sharplydownward in 2003. Financing of most of the projectshas been managed by the government-ownedKorean Development Bank. The volume of privatefinancing involved is unclear but has probablybeen increasing from domestic sources, benefitingfrom simultaneous efforts to develop the domesticcapital market. But further container terminalinvestments have also been attracted frominternational port operators.Private capital has made a marginal but significantcontribution to China’s recent large investmentsin roads (including creation of a tolled networkof trunk roads of at least 20,000 km), but it is unclearwhether it has contributed significantly totheir efficiency. Two principal sources were tapped.The first was equity contributions from overseas(mainly Hong Kong) financial partners, whichmade joint ventures with provincial communicationdepartments for construction of toll roads butplayed little part in operational decisions. Fromthe mid-1990s, and especially after clarification ofthe law in 1997, funds were also raised fromChina’s own stock markets; shares in packages ofcompleted toll roads were offered (securitization).Some of the companies formed for thispurpose were also able to float revenue bonds andraise bank loans against the security of their revenuestreams.Concerned about port capacity/efficiency obstaclesto the country’s rising international trade aspirations,the government of India finally decidedin 1995 to experiment with foreign private participation.It offered a concession for constructionand operation of a new container terminal atNhava Sheva, adjacent to the modern public sectorfacility run by the Jawaharlal Nehru Port (JNP)Trust near Mumbai. The tender for a 30-year concessionwas won by P&O Ports (Australia) andsigned in 1997. Following its completion in mid-1999, Nhava Sheva attracted increasing amountsof traffic from JNP. The latter responded by improvingon its previous efficiency, though not tothe level achieved by its competitor. The experimentwas considered successful and led to a seriesof investments by P&O and other internationaloperators in different Indian ports.Confronted with the addition of some 5,000 kmof international borders as a result of the breakupof the Yugoslav Federation and the obstaclesthese posed to international trade, the eight corecountries of southeastern Europe gradually came119

A DECADE OF ACTION IN TRANSPORTBox B.1: Expanding Trade by Easing Movement across Borders in Southeastern EuropeThe past 20 years have seen rising recognition worldwide ofthe significance of logistics for international trade flows and of thecontributions that better functioning of transport can consequentlymake: increasing exports, lowering the cost of imports, and stimulatingprivate productive activity. It has also increasingly been recognizedthat achievement of real operational improvement dependscrucially on improved communication among private traders andfreight forwarders, transport providers, and the government servicesthat regulate and control movements across borders.One region that has required particular attention is southeasternEurope, where the breakup of the Yugoslav Federationadded some 5,000 km to international borders. The mostly smallcountries of the area often face multiple border crossings formuch of their international trade. Starting with an initiative sponsoredby the United States and Italy in 1996 to promote regional cooperation,and assisted strongly by the EU, the eight countriesthat form the heart of this region (Albania, Bosnia and Herzegovina,Bulgaria, Croatia, the former Yugoslav Republic of Macedonia,Moldova, Romania, and Serbia and Montenegro) have graduallycome together in a focused joint effort to ease border crossingsand increase trade flows.Since the program started in 2000 in most of the countries,border-crossing delays have been substantially reduced (from averagesof 3–5 hours to about 1 hour) at the more than 20 locationschosen for initial focus, contributing to a rapid revival of trade. Customsperformance indicators have generally strengthened, and limitedsurvey results indicate possible reductions in the number orsize of bribes that transporters were obliged to pay to cross someborders. The approach developed has introduced several importantinnovations in the roles of the public and private sectors in thesecountries:• Formation and development of national trade facilitation committees(pro-committees)—mostly originally started under theU.S.-Italian initiative—bringing together Chambers of Commerceand transport associations with representatives of the publicagencies involved in border crossings, and organization of theregional meetings of these bodies back to back with regionalmeetings of the government bodies chiefly responsible for theoverall program in all eight countries.• Central focus on modernization and simplification of customsprocedures, introduction of computer applications to makeprocesses more efficient and transparent, and improvement inhuman resource management, all as instruments that will graduallyshift the basic orientation of the customs services from obstructingeasy flow of private international trade to activelyfacilitating it. Commonly agreed performance indicators arecollected monthly (with delays from relatively few countries) andpublished on the Internet, which helps stimulate action towardfurther improvement.• A common regional Web site has been developed, largely underleadership of the Chambers of Commerce, to promote trade facilitation,provide up-to-date information on procedures forcrossing the various border points and on delay times, and to conveydistance-learning programs in transport and logistics management,assisted by international associations.• Periodic surveys of professional private sector experience andopinion surveys about border crossing and customs have beenconducted by independent consultants in collaboration with theChambers of Commerce and Internet publication. These serveas a valuable cross check to the official performance indicatorsand enable the authorities, as they set priorities, to give moreweight to citizens’ experiences.Benefiting from this experiment, other countries—particularly inthe Caucasus and Central Asia—are initiating similar efforts, andthe southeastern European countries are envisaging a secondjoint phase, extending the effort to cover remaining road bordercrossings and those on railways and the region’s importantwaterways.together in the second half of the 1990s to launcha public-private initiative, essentially at the oversightlevel, to reduce border-crossing problems(see box B.1). The central focus chosen was modernizationand simplification of customs procedures.Related computer applications wereintroduced as instruments toward gradual changeof customs officers’ attitudes and performance.Agreed-on performance indicators, and muchother trade-related information, are regularly publishedon the Internet and discussed in intercountrymeetings. Delays have been substantiallyreduced at the targeted border points, and thereis an indication of a possible reduction in the120

APPENDIX B: BACKGROUND PAPER SUMMARIESnumber and/or size of bribes that transportershave to pay to cross borders in some countries.In Africa, following a partially successful initiativein the early 1990s to create a road fund andstrengthen road maintenance, Tanzania moreformally established a road fund, along with apublic-private board to run it, in 1999. Then, in2000, a semiautonomous executive agency to managethe primary network (TANROADS) was established.The board’s extensive monitoring andauditing oversight helps significantly ensure thatuser charges to support maintenance are dulycollected and devoted to the intended purpose.Local contractors have benefited from long-termefforts to support their development; they nowhandle most of the maintenance work. In linewith the legislation establishing it, the board is alsohelping address the previously neglected weakcapacities of district and urban councils to maintainthe extensive networks for which they areformally responsible.South Africa has long experimented with tollroads, initially as public sector undertakings, butin the late 1990s also as concessioned operations.The South African National Roads Agency Limited(SANRAL) was created in 1998 as a governmentcorporation responsible for the country’s nationalroads. From the start SANRAL has put a strong emphasison mobilizing the energy and resources ofthe private sector for road development and tostrengthening local enterprises. Three majorroads, each about 400 km total length, have beenconcessioned to joint foreign/national consortia,with transfer of existing assets, requirement tobuild/rebuild certain sections and improve theremainder, and full transfer of construction andrevenue risks. All nonconcessioned national roadsare now covered by routine road maintenancecontracts, tendered competitively to consulting engineeringfirms against performance specificationsthat require 80 percent of the work to besubcontracted to small contractors that have lowentry barriers and that are supported by training.A more in-depth, global coverage of private sectortransport initiatives is covered in a Bank workingpaper intended as a companion paper tothe evaluation (Willoughby 2007) and publishedsimultaneously.Results to DateAt the broadest level, this review suggests that themanagement improvements highlighted in the1994 WDR have stood the test of time in theOECD countries. It also suggests that they havebeen quite widely pursued by developing countriesand have often made a significant differenceto transport sector performance. Major weaknessesthat emerged in some of the earlier privatizationefforts—such as Chile’s urban publictransport reforms, Argentina’s freight railway concessions,and Mexico’s toll-road development—have been largely avoided in the reform initiativesintroduced in the last decade.Pursuit of the WDR theses through an increasedprivate sector role in trade-related port and railwayinfrastructure has generally had significantlypositive effects on technical and allocative efficiency.This has been the case even where modificationshave had to be made to the structuresfirst chosen for increased private participation, aswith railways in the United Kingdom. Positiveimpact has quite often been further enhancedby follow-on effects on other institutions and bypostprivatization restructurings and mergers. Efficiencyand service indicators have typically shownsustained improvement following the introductionof private participation, and traffic growth hastended to exceed that of the regional economy,reflecting in part the attraction of types of trafficpreviously handled by other modes and facilities.The effects have tended to be more significantwhen the privatization was preceded or accompaniedby measures to reduce nontechnicalregulation of the mode concerned and its competitors,when the structures offered to privatebidders were designed to sustain competition, andwhen appropriate measures were taken to ensureaccess of competing providers to any facilitieswith local monopoly characteristics.In the roads field, the most clearly positive effectsof the WDR principles on technical and allocativeefficiency have been through their application to121

A DECADE OF ACTION IN TRANSPORTthe management of road networks generally: clarificationof road department accountability andgreater management autonomy; establishmentof supervisory and consultative bodies that representusers better; and transparently competitivecontracting of works to the private sector, increasinglyagainst performance-based specifications.It is probably fair to characterize thecombination of these and related elements as arevolution in road management that has beenunder way since the late 1980s and early 1990s.So far, however, that revolution is concentratedin only a few countries in each Region. Roadfunds have also been able to make a useful contributionin some countries’ public expendituremanagement systems, but the main emphasis inthe majority of countries needs to remain on improvingthe allocation of roads spending and itstechnical efficiency.Growth of partially privately financed toll roads hasclearly been an important phenomenon of thedecade since the WDR, especially in developingcountries. Although such roads represent tinyproportions of the network, they often carry significantproportions of overall traffic. They havealso accounted for the largest share of the totalinvestment for transport projects recorded in theBank’s public-private infrastructure (PPI) database,although that share has been steadily declining,from 72 percent in the 5 years immediatelypreceding the WDR to 38 percent in the period1999–2003.The net effects of toll roads, or the private financingof them, on the technical and allocativeefficiency of the transport sector are nonethelesscomplex, and convincing assessment of thefacts is comparatively rare. In Latin America, whichaccounted for more than half of PPI toll-road investmentsthroughout the decade, it may be concludedthat most of the programs had positiveeffects on technical and allocative efficiency. Biddingappears to have been more transparentlycompetitive than under traditional governmentcontracting.Second, despite important exceptions, tolls werenormally held to 1–2 U.S. cents per car-km inmaintenance concessions and to 2–4 U.S. cents onconcessions involving major upgrades and newconstruction. Third, the huge reductions in publicinvestment in transport that resulted frommacroeconomic considerations increased the marginalvalue of resources raised from elsewhere.Greater doubt surrounds some of the Asian programs,including China, which alone accountedfor nearly one-fifth of PPI toll-road investments inall developing countries during the period. Thereis no evidence of private investment in Chinahaving introduced new or additional technicalefficiency. Tolls were typically higher than in LatinAmerica, and much higher relative to the country’slower income levels. Traffic diversion, especiallyof trucks, has been a significant problem.More ample public resources were available, althoughthe private funds nonetheless constituteda useful supplement.Not directly stemming from the management emphasesin the 1994 WDR but important for theirfuture application have been advances in chargingroad users for the costs that their activity imposeson society—particularly the cost of congestion, pollution,and accidents. Whereas pricing and taxingstructures to deal with these externalities werelargely limited at the start of the 1990s to Singaporeand some experiments in Norway, a fewroads (mostly privately financed) have since beendeveloped specifically with time-varying electroniccharging systems that help reduce congestion. Anotable new trend has been construction of largescaleurban motorways (largely privately financed)with sophisticated tolling systems, as in Australiaand Chile. London has very successfully introduceda central city access charge, and Switzerland,Austria, and Germany have all created electronicsystems to charge trucks for the costs that theirmovements impose.Overly centralized government-owned urban passengerservices, torn between conflicting objectives,still exist in some cities of transitioneconomies and a few developing and OECD countries.They can often benefit from a direct applicationof the WDR principles in their rationalizationand restructuring.122

APPENDIX B: BACKGROUND PAPER SUMMARIESA more common problem in the developing countriesis development of better-regulated competitionamong existing private providers. Theycould generate a more reliable and safer set of servicesthat link appropriately. There is strongerrecognition than there was 10 years ago, in OECDand developing countries alike, of the need for integratedefforts between public managers responsiblefor road infrastructure, traffic flow, andparking regulations, and the normally private buscompanies, with interdependent performancetargets jointly set.Finally, the pressures of increasingly open competitionin the provision of international air services,and in many countries domestic air services,too, have brought improvements in the technicalefficiency of air transport over the last 10 years.The rise of low-cost carriers, now extending tomany of the larger developing countries, hasmade a significant contribution to transport’s allocativeefficiency. Private management of publicairports is largely an innovation of the past decade,but how far this has contributed to these efficiencyimprovements is not yet clear.Evaluation of Bank Support forRoad FundsIntroductionThe focus of this section is road funds, an instrumentseveral Bank operations have supportedto redress the long-term underfunding of roadmaintenance. Over the past 10–15 years Bankprojects or sector reviews have supported therestructuring of road management and road maintenancefinance, including the creation of independentroad boards, the establishment of roadagencies, and the establishment of properly managedroad funds. Such road funds are commonlyknown as second-generation funds.The Bank’s interest in road funds and road managementoriginates in a long-standing “crisis” concerningthe quality of road maintenance in mostdeveloping countries, especially in the lowerincomeones. The failure of governments to provideadequate funding for road maintenance wasseen as one of the critical factors; road infrastructurehad deteriorated and countries were rapidlylosing the value of their road assets. Road funds,independent of the budget and providing an adequatelevel of funding to finance maintenance expenditures,were seen as a possible solution.For more than 15 years the Bank has led a multidonorprogram to help Sub-Saharan African countriesimprove the performance of their transportsystems and services. This program has supportedthe establishment of modern road funds andcomplementary reform of highway management.The Bank has also been involved in similar activitiesin other Regions. Three main sources havebeen used to prepare this section: (i) a literaturereview, (ii) IEG’s database, and (iii) a survey ofBank staff. All three elements together provide areasonably clear picture of the effectiveness of theroad funds and the conditions surrounding them.In particular, the SSATP Road Maintenance InitiativeMonitor Series provides useful data.Road Management ReformFrom the 1990s, a majority of the Bank road projectsfocused on maintenance. Yet progress was erratic.Most countries did not have the capacity toincrease and sustain budget funding for roadmaintenance at the required level. In response,the Bank in 1995 issued a report suggesting thatthe maintenance crisis could be effectively tackledby addressing four issues:(i) Ownership: Empower road users and encouragethem to take an interest in the managementof roads; an essential componentof this concept was creation of a roads board.(ii) Funding: Secure stable and adequate flowsof funds.(iii) Responsibility: Creation of an organizationalstructure for managing the different componentsof the road network.(iv) Management of a businesslike road agency,including strong financial management andaccountability.The driving force for this approach was not roadmaintenance, but a broader perspective of theroad sector. Could roads be put in the marketplaceon a fee-for-service basis, like a business, as has123

A DECADE OF ACTION IN TRANSPORTbeen done with other infrastructure services?This would be a “commercial approach” to roadfinancing.Financing Road Maintenance and Road FundsTwo approaches are followed: (i) The budget approachis the most widely used. It assumes thatroad expenditures (except for toll roads), includingmaintenance, are a public expenditure thatneed to be covered by the national budget. Fueltaxes, vehicle registration fees, and other levies aretaken as general taxes. Extrabudgetary funds aredeemed to hinder government’s efforts to allocatefunding to national priorities. (ii) The road fundapproach postulates that road users should payfor the cost of the roads and that revenue thus generatedshould be applied to cover road costs. Theinstrument is a road fund that generally becomesthe main source of finance for road maintenanceand other road expenditures. This approach, withvariations, has been used in the United States,Japan, and New Zealand since the mid-1950s andis being used in more than 30 emerging economies.Users pay “user charges” mainly in theform of a gasoline levy, which generally providesthe bulk of revenues. Income from these chargesis, in principle, automatically allocated to road expenditures,especially maintenance.Road funds meeting the “commercial approach”are known as second-generation road funds, to differentiatethem from older road funds that werebasically a line in the budget. However, seldom dothe funds meet all the second-generation criteria.The second-generation funds operate on the principlethat any extra spending on roads is financedthrough extra payment by road users. Therefore,second-generation funds are budget neutral; somemacroeconomists disagree with this view.Bank Policy and PracticeThe Bank for many years lacked an official policytoward road maintenance finance, and in some internalreports, notably in the 1980s, generallyopposed road funds on macroeconomic grounds.More recently (in 2004) it was agreed that the“Bank sometimes endorses public enterprise-styleroad funds to redress long-term underfunding ofmaintenance.” Although with variations amongRegions, Bank economic reports have becomeincreasingly supportive of road funds, sometimesimproving existing funds and at other times creatingsecond-generation funds from scratch.Design and Management of Second-GenerationRoad FundsThere are large variations from country to country.Many of the second-generation funds havebeen restructured frequently since they were firstcreated. Restructuring of the fund in Benin hasbeen effective, converting it into an autonomousagency with less staff and a competent team andproviding it with adequate resources. Attempts toreform the fund in the Republic of Yemen, however,have been less successful so far. This is partlybecause the country has been in a financial crisisresulting in the need to keep a strict control of allincome and expenditures. In Argentina, betweenthe 1970s and 2006, there have been cycles of creatingand then reforming or dismantling roadfunds. The existing road fund has recently beenamended to compensate private toll-road operatorsfor low toll rates.Road Boards—Composition and MandatePractically all the second-generation funds haveprivate sector representation on their boards. Inmore than half, the private sector representativesare in the majority. Some boards have executiveand others only advisory powers.Revenue Sources and Channeling and Allocation ofResourcesFunding for the road boards is generated mainlyby a fuel levy, generally set as a fixed amount perliter and complemented by other sources, suchas tolls and fees. Most second-generation fundsfocus on routine and periodic maintenance ofthe national network, but some allow part of theresources to be used for road rehabilitation. Othersalso allocate resources to maintain municipalor provincial roads and even subsidies to roadtransport.Performance of Road Funds—Outcome IndicatorsIn several countries the percentage of roads ingood condition has significantly increased. InBenin, the increase has been 9.4 percent per year124

APPENDIX B: BACKGROUND PAPER SUMMARIESsince the creation of the road fund. In Guatemala,the percentage of roads in bad condition droppedfrom 40 percent in 1994 to less than 20 percentin 2001. In countries without this information, aproxy indicator is the percentage of estimatedneeds financed. The level of maintenance fundingwas reported to have increased significantly inHonduras and in Guatemala, which had a 250percent increase over 6 years. In Uzbekistan, theresources of the road fund increased almost fivetimes over a period of 4 years. In contrast, the experiencein Africa is less positive; only one thirdof the 27 road funds in SSATP member countriesare regularly meeting routine maintenance expenditureneeds.Performance of Road Funds—Process Indicators• The percentage of maintenance works contractedout has increased significantly, reachingclose to 90 percent in Zambia and Ghana.• The percentage of funding for road maintenancefrom local rather than external sourceshas also increased in some Latin Americancountries (in Honduras, from about 20 percentin 1995 to almost 100 percent in 2000).• Results regarding the allocation of resourceshave been mixed, as many countries continueto use standard formulae rather than a systematicassessment of maintenance needs. Insome African countries, disbursements appearto be generally biased toward urban and mainroads. In Ghana, the road fund provides fundingto the districts and this is supported by theMinistry of Finance.• In Honduras, microenterprises for carrying outroutine road maintenance have been created asa result of a requirement by the road fund.• Some of the boards have put in place measuresto improve transparency. In Ethiopia, the boardpublishes its budget quarterly. In Zambia, anyuser can access information on the disbursementof the fuel levy. In most countries, bidsare advertised in the local press and sometimesthrough the Internet.• Few countries appear to carry out regular technicalassessments of the works. Ghana is an exception,as its road fund regularly producestechnical audits. In Tanzania, the road fundundertakes annual technical audits of 20 percentof the work it finances; generally, administrativecosts are set not to exceed 3 percentof the fund’s income.Lessons• Second-generation funds are appropriate whenthe lack of finance for maintenance has led toa severe deterioration of the road network,provided there is government commitmentto off-budget financing of maintenance andto commercially oriented reforms of roadmanagement.• A road fund should not be established whenthere is a high level of corruption and little likelihoodof having independent audits and transparentprocurement.• Financing of road maintenance should beviewed in the broader context of roadmanagement.• Monitoring and evaluation of secondgenerationfunds should start with credibleassessments of road condition, trends in allocationfor road maintenance, and efficiency ofroad maintenance operations.• Private sector participation in the secondgenerationroad boards is an effective way toimprove transparency and accountability inthe use of road maintenance funds.• There is improved effectiveness of thefunds disbursed through multiyear budgetingarrangements.Country Case Study—BrazilThis case study shows the Bank’s approach inthe transport sector to poverty reduction in alarge country that has huge potential but a skewedincome distribution; Brazil also must recoverfrom a national financial crisis.IntroductionThe transport sector represents about 2 percent ofBrazil’s gross domestic product (GDP). The economyis disproportionately dependent on roadtransportation; more than 60 percent of the country’sfreight in terms of ton-km moves by truck, 20percent by rail, and 13 percent by coastal navigationand inland waterways. The paved federal highwaynetwork (58,000 km) is the cornerstone of thecountry’s transport sector.125

A DECADE OF ACTION IN TRANSPORTBrazil also has the largest railway system in LatinAmerica (29,000 km). Trains are used primarily tocarry goods—two-thirds of which are iron ore andcoal. Intercity railway passenger traffic has virtuallydisappeared, but important developments havetaken place in urban passenger transport. The privatizationof the country’s entire freight railway networkbetween 1996 and 1999 resulted in substantialimprovements in the rail infrastructure and rollingstock, as well as gains in efficiency, output, and thequality of services. Upgrades of the commuter railsystems in most of Brazil’s metropolises have alsolaid the foundation for the further modernizationof the sector. Nevertheless, some projects have importantunfinished components because of financial(fiscal space) issues, and a few lack conditionsfor financial and operational sustainability.The country has the two largest inland waterwaysystems in Latin America: the Amazon basin andthe waterways in the south that feed into the Riode la Plata. Brazil’s 14,000 km of navigable rivershave a large but underdeveloped potential as carriersof products such as grains and minerals. Thecoastal shipping trade in bulk goods has increased,but its share of the cargo market is still marginal.Given the size of the country, air travel plays animportant role in long-distance passenger travel,transport of commodities with a high value-toweightratio, and the conveyance of mail. Brazilhas 26 principal airports (13 of which handle internationalflights). Regarding airlines, Brazil hassix major international, 10 domestic passenger,and three all cargo.Some Key Issues• The high cost of long-distance road transportis a critical issue for a country such as Brazil,where most freight moves by road. The insufficiencyand poor condition of the road networktends to undermine the physical integrationof the country, and it adversely affects itslong-term economic development.• Brazil is an urban country (83 percent of its populationis urban), and its dozen large metropolises,with populations of more than 1 million,face mounting urban transport problems. Insome instances, the political, technical, and financialcapacity of the federal and local governmentsis almost overwhelmed by the escalatingproblems of these cities.• In Brazil’s large metropolitan areas, motorizedtransportation harms the environment andhas a high economic cost. The governmenthas actively sought to reduce the air pollutioncaused by motor vehicles. It has integratedurban planning with air quality improvementstrategies, improvements in commuter rail/bussystems, installation of centralized traffic managementsystems, development of vehicle fuelsthat pollute less (Brazil is the leading producerand exporter of sugar-based ethanol), and thepromotion of nonmotorized transport. However,much remains to be done in all thesefields.• At least 38,000 people die each year in Brazilfrom traffic accidents; the mortality rate isamong the highest in the world and three tofour times higher than in developed countries.Accidents are currently the fourth leadingcause of death in the country. The economicand social costs of traffic accidents are enormous(exceeding $3.3 billion per year).• The government’s austere fiscal policy overthe past 10 years has been successful in keepinginflation in check and reducing the netdebt of the public sector. Lack of fiscal space,however, has led to the postponement of basicmaintenance and needed rehabilitation investmentsin the transport sector. Only onequarterof the federal paved highway networkis now in good condition (down from morethan 40 percent in 1996). 2• A major underlying cause of the problems facinghighway and urban transport is the steadyrise in private automobile use—a long-term patternconsistent with the worldwide trend. Inurban areas, there has been a shift away frompublic transportation. According to a recentstudy by the Associação Nacional de TransportesPúblicos, private cars use 12.7 timesmore fuel than buses (per number of passengersper kilometer transported), produce 17times more pollutants, and occupy 6.4 timesmore space on roadways.• Access by the poor to public transportation isan issue closely linked to their daily life. Thebus-metro systems generally extend into theimpoverished neighborhoods on the outskirts126

APPENDIX B: BACKGROUND PAPER SUMMARIESof metropolitan regions; they constitute themain channel for low-income workers to commuteto and from work and to reach health centersand schools. However, a significant shareof the poor population cannot afford the fares.Thus, equity concerns (providing access andaffordable transportation to the urban poor) areat odds with sustainability considerations (reducingchronic government deficits and allowingprivate sector providers to make areasonable profit).Bank Involvement in Financing Brazil’sTransport ProjectsBrazil is one of the Bank’s major clients. Cumulativelending to the country as of June 2005 was$36.7 billion, a total surpassed only by India andChina (and equaled by Mexico). However, Banklending to the country is marginal, relative to thesize of its economy—the 14th largest in the world.Total Bank loans have averaged more than $1.5 billionper year since 1998, but they represent only0.2 percent to 0.3 percent of the country’s GDP.The Bank has approved 43 loans to Brazil forprojects focused primarily on transportation andhas financed 28 other projects with smaller transportcomponents. But since 1970, total Banktransport sector loan commitments have fallensubstantially in real terms (while Brazil’s populationhas nearly doubled).A number of factors have contributed to thedownturn in Bank lending. The government’sstrict fiscal policy over the past 10 years has resultedin drastic cutbacks in budget allocations forinvestments in the transport sector and parallelreductions in expenditures provided by externalloans. Moreover, in recent years, the Bank hasshifted its focus to development policy lending insupport of Brazil’s fiscal and financial reforms.During 1999–2005, 14 large Development PolicyLoans for a total of $10.5 billion were granted toBrazil, representing about 68 percent of totalBank lending to the country (and 94 percent in2005). However, an underlying reason for the declinein Bank lending can perhaps be found in thefact that Brazil is now a middle-income countrythat is gradually becoming less dependent on developmentbank financing as its access to privatecapital markets improves. At the same time, thegovernment still restricts the extent of public investmentin infrastructure.Main Areas of Bank Support to Brazil’s TransportSectorBank lending to Brazil’s transport sector has primarilytargeted two sectors: highways and urbantransport. Bank projects have focused on supportingthe implementation and consolidationof ways to reduce logistics costs at the policylevel (including measures in the customs, port, railway,and road areas). In the road sector they haveaimed at transforming road administrations fromexecuting to management entities, increasing privatesector involvement, stabilizing funding forroad maintenance and rehabilitation, improvingefficiency and effectiveness of public spending,and strengthening the states’ environmental capabilitiesto ensure the sustainability of economicdevelopment.In addition, Bank-supported projects have financedrehabilitation and improvement of thestate and federal road networks, as well as improvementof municipal road networks, with aview to fostering regional integration. A recentlyevaluated state highway program in Goias Statewas designed as an Adaptable Program Loan. Itachieved its goals of increasing the efficiency ofthe state road transport system, transferred themaintenance of municipal roads to the municipalauthorities, and strengthened the executing agencies.Funding for maintenance and rehabilitationof the federal paved network has increased duringthe present decade but has been insufficientto halt the deterioration in the network.In the urban transport sector, much of Bank activitysince 1990 has supported the government’s decisionto transfer the urban rail systems from thefederal level to the states and municipalities. Bankprojects have also focused on greater physical integrationand institutional coordination in the deliveryof urban transport services, including modaland fare integration. Moreover, the projects havetargeted the benefits of the urban rail systems tothe poor population. This has included the introductionof the vale transporte system (a compulsoryrequirement on employers to finance partof the commuting cost of their employees).127

A DECADE OF ACTION IN TRANSPORTDuring the past decade, the Bank has been associatedwith all of Brazil’s privatization programsin the transport sector through the provision oflarge loans and technical assistance. 3• The Bank supported the privatization of thefederal railways through technical support underpinnedby a Bank loan that financed staffretrenchment. The entire railway network,comprising more than 28,000 km of rail line,was concessioned to the private sector during1996–99. Investments made by the concessionairesin the track and rolling stock during1997–2005 totaled about $2.3 billion.• In the road subsector, the federal governmenthas concessioned about 5,000 km of state highways,and the São Paulo state about 2,500 km.However, the process was slower after the firstwave of concessions in 1994–95.• In urban transport, the Bank has supported anumber of projects aimed at advancing thetransfer of the commuter rail systems to the privatesector as a way to improve their performance,attract new investment, and reducethe chronic fiscal burden that these operationsrepresent. Although in some cases (suchas Belo Horizonte and Recife), private sectorcontrol of the commuter rail systems has beendelayed by the fiscal crisis, in general, progressin the urban arena has had very positive outcomes.• Management of all major ports has now beentransferred to the private sector, with the governmentretaining control of port infrastructure.This has improved their efficiency andreduced port fees.• The Bank has also collaborated with thegovernment in the formulation of relevantoperational reform policies, including the separationof the policy formulation and regulatoryfunctions.Bank Performance in Supporting the Country’sTransport SectorThe ratings for outcome, sustainability, and institutionaldevelopment of Bank-supported projectswere low for operations carried out duringthe late 1980s and early 1990s—years that werevery difficult for Brazil, as they were for much ofLatin America (the “lost decade”). With the upturnin the economy, project performance indicatorsimproved during the second half of the 1990sand even more so in 2003–04. Examples ofprogress include the pioneering efforts to concessionthe suburban railways, the subway system,and the ferry boats in Rio de Janeiro, saving some$400 million. In São Paulo the suburban railwaythat only supported 400,000 riders per day beforethe Bank project in 1992 is now transporting 1.6million people daily.The relevance of transport sector projects hasbeen high. The Bank’s analytical and advisory assistanceand financial support has been consistentwith Brazil’s current development priorities andwith the Bank’s country and sector strategies.The efficacy of Bank lending and policy advice programshas generally been substantial. A few urbantransport projects were seriously affected by thefiscal space restrictions imposed after 2002, atleast until the Pilot Investment Program was createdin agreement with the International MonetaryFund (IMF). These developments could notreasonably have been anticipated at appraisal. Animportant lesson for countries affected by fiscalspace problems is that it is essential that urbantransport projects be included in any Pilot InvestmentProgram–type arrangements, as theyare likely to attract strong support because oftheir high social benefits.Overall, groundbreaking achievements were madein passenger transport integration and in supportof the decentralization of suburban railwayservices. The Bank also supported the first buswayproject supported by the private sector. The efficiencyof Bank-supported projects completedsince 1980 has been generally rated as substantial,although the economic rates of return (ERRs)have sometimes been lower than anticipated atappraisal, again because of the impact of delaysin completing the infrastructure because of the financialcrisis.Since 1995, the Bank has produced 11 reports onBrazil’s transport sector, six general reports thatinclude transport sector issues, and a number ofpolicy notes. As lending levels to Brazil’s transport128

APPENDIX B: BACKGROUND PAPER SUMMARIESsector decrease, the relevance of Bank supportto the country will become more dependent onthe quality and effectiveness of its technicalassistance.In summary, the outcomes of the Bank’s approachto assisting in the reduction of poverty in Brazilthrough the transport sector have been substantiallyachieved. Project investments were often avehicle to support the government in more fundamentalreforms associated with decentralization,privatization, and pro-poor urban transport measures.Maintenance issues, however, especiallywith regard to the federal road system, remain aserious concern.Country Case Study—IndiaThe Bank has tried to adjust its transport programto changing portfolio needs as India’s economicgrowth has soared.The Economy and the Transport SystemIndia’s economy is the third largest in Asia, afterJapan and China. GDP per capita, at purchasingpower parity, is estimated at $3,100. India’s populationof 1.1 billion is growing at 1.4 percent peryear, and the population is about 70 percent ruraland 30 percent urban. About two-thirds of thepopulation depends on agriculture for their livelihood,and about 25 percent of the population livesbelow the poverty line.Transport demand in India has been growingquickly. During 1967–87, total demand for intercityfreight transport grew at an average annual rateof 5.3 percent, while GDP grew at an average of4.2 percent. During the 1990s, freight transport demandgrew at 10 percent per year, while the economygrew by 6 percent to 7 percent. Since 2000,transport demand has been accelerating. In recentyears this demand has shifted among transportmodes, mainly to the advantage of road transport,which today carries 70 percent of land transportdemand. The overall length of the roadnetwork has more than doubled in the last 20years. Yet only 60 percent of the villages are connectedby all-weather roads, and there are large differencesacross the states in village connectivity.There has also been a major expansion of theports, with several new container terminals developedby private operators. Modernization of facilitiesand better management also occurred, butto a lesser extent than in the other transportmodes. India’s transport system remains old, saturated,and poorly maintained, providing lowqualityservices. This is because for many yearsthe transport system has been managed from asupply-oriented rather than a market perspective.More than a quarter of the national highways andmore than half of the state highways are in bad condition.The trucking industry, in contrast, is mostlyprivately owned and is highly competitive.The government in recent years has launched amajor program to improve the national highwaysystem. The program intends to balance the needsof modernizing the road system with maximizingthe benefits to the whole population. The resultis many widened roads but few really modernhighways. Minimizing the difficulties with landacquisition and with application of social safeguardsto affected people appears to be a key reasonfor the widening approach. It is not obviousthat, given the population already living along theroads, widening existing roads will result in lessland acquisition or resettlement than constructingnew expressways.Government efforts to open infrastructure to privateinvestors starting in the 1990s have met withlimited success in the transport sector. It has succeededmainly in the ports and is just starting tohave an effect with airports. Although many smallroad projects have been carried out with the participationof private operators, they represent afraction of overall road investments.Bank Assistance to the Transport SectorIndia today is the Bank’s largest borrower. Lendingfor all Bank projects reached $2.9 billion in fiscal2005, more than double the $1.4 billion of theprevious year. The Bank’s assistance is focused onupgrading infrastructure; improving people’s accessto social services, especially education andhealth; and building rural livelihoods. Lending fortransport projects in fiscal 2005 reached $1 billion,or almost a third of total Bank lending. Several129

A DECADE OF ACTION IN TRANSPORTnontransport projects also include transport components—mainlyrural roads.Bank lending for transport in India has evolved dramaticallyover the past 20 years. Until the first halfof the1980s, most loans were for railways andports; during fiscal 1981–86, 80 percent of thelending went to projects in these two modes. Inthe following 5-year period, road lending increasedto about half of total transport lending. In themost recent period, fiscal 2001–05, the overalllevel of lending for transport increased significantly,and the shift toward roads became stronger.Recent years have seen a rise in the size of the roadprojects focused on state networks, with severalloans exceeding $300 million. At the same time,several of these projects include large componentsfor institutional development. The Bankhas supported rural roads through state-specificor multistate rural road projects, as well as throughagriculture and rural development projects. Inthe latter, there were cases where up to 50 percentof the project cost was to improve ruralroads. There is some evidence that the country’srural roads are contributing to poverty reduction.For example, the highest rate of decline inpoverty over the past 20–30 years has been in Kerala,which has one of the highest road densitiesamong the Indian states.The Bank’s last direct loan for railways was in1988. Since then, the Bank did, however, approvea project that aimed to improve efficiency of railtransport for containers to serve both domesticand international traffic. This 1994 project supportedthe reform of an offshoot of Indian Railways(IR). It helped the Bank maintain a dialoguewith IR and provided a role model for other IRbusiness.Only one urban transport project has been approvedover the past 20 years. The project, currentlyunder way, is comprehensive and ambitious.It aims to improve the efficiency and sustainabilityof Mumbai’s transport systemThe last port project was also approved morethan 20 years ago. It helped improve container facilitiesat the Nhava Sheva port in Mumbai. Thissuccessful operation helped modernize containerfacilities at the port (box B.2). Resettlement hasbeen an important component in nearly all Indiantransport projects.Bank assistance also included the preparation ofseveral reports that focused on sector policiesand strategies and on specific topics such as highwayfinance and urban transport. The most significantof these is a 2002 report that covers thewhole transport sector. Another useful report isa comparison of Indian and Chinese highway development,railway policies, and management.Performance of Bank AssistanceSix of the eight projects (six road, one logistics,and one rail) closed since 1994 had satisfactoryoutcomes. Overall, project-financed investments,including projects deemed unsatisfactory, wereeconomically efficient, showing a fairly high rateof return.There were two projects that failed. First, thestates’ road project was a complex project that involvedfour states with widely varying implementationcapacities. The project was satisfactorilyimplemented in two of the states, Maharastra andRajasthan. But in the two other states, UttarPradesh and Bihar, the performance of the publicworks department was weak, and implementationfailed. Second, the national highway projectwas unsuccessful because of poor project preparation,weak implementation capability by theroad agency, and weak capacity of local contractorsand consultants.Except for the two failed projects, all other projectswere considered sustainable. In contrast,most of the projects had only modest institutionaldevelopment objectives and, as a result, hadfairly modest impacts.Two projects achieved significant institutionaldevelopment. The container transport projectsucceeded because, as intended, the state-ownedcontainer company became a mixed privatepubliccompany, with a significant private equity(37 percent, substantially above the original goal).130

APPENDIX B: BACKGROUND PAPER SUMMARIESBox B.2: Gradual Incorporation of Private Participation in Indian Port DevelopmentAs Indian development policies evolved from having an emphasison self-sufficiency in the 1980s to participating more fully in internationaltrade in the 1990s, concerns arose about the country’s trunktransport system and the obstacles it posed to trade development.Most international trade passed through 11 major ports run byPort Trusts, which provided their own services under close centralgovernment supervision. Near doubling of trade tonnage overthe 1980s put the ports under severe pressure. To relieve the problem,increasing attention was given to inviting private participation,introducing modern management, and relieving government budgetaryconstraints. In 1994 the Ministry of Surface Transport, withresponsibility for port oversight, issued a statement of intention toseek private participation. In 1996 it issued guidelines enabling thePort Trusts to lease facilities to private operators (and lease equipmentowned by them) and to award competitive BOT contracts forconstruction of new facilities on port lands. Perceived weak privatesector response to these new opportunities led to the offerin 1997 of various tax incentives and less-restrictive limits on foreignfinancial participation. It also led to the creation of a TariffAuthority for Major Ports, which was supposed to reassure potentialprivate investors that they would not find the services they offeredbeing undercut by the Port Trusts’ own services.The prime candidate for a first experiment with private participationhad always been the JNP Trust, whose facilities had beenconstructed in the 1980s. Being new, it had no Dock Labor Board,avoided the more extreme labor tensions characteristic of thetraditional ports, and had relatively modern equipment. A schemehad been drawn up in 1994 to concession the JNP Container Terminalto the private sector. Doubt among Port Trust members,however, after consultations with all affected parties, combinedwith the advent of a new Minister of Surface Transport more sensitiveto labor concerns, led to replacement of this approach witha concession for construction and operation of a new containerterminal at the adjacent Nhava Sheva site. The tender for thiswas launched in December 1995.In the meantime the Port Trust leased additional equipment fromprivate sources, as permitted under the 1996 guidelines. The tenderwas won by P&O Ports (Australia), with whom a 30-year concessionfor a two-berth container terminal of 600 meters quaylength was signed in 1997.Nhava Sheva began operation slightly ahead of schedule, inApril 1999, and almost immediately attracted increasing amountsof traffic away from the JNP Container Terminal. By early 2001 thefacility was regularly handling more than 60,000 20-foot containerequivalent per month, whereas JNP traffic had fallen to less than40,000. But the Port Trust’s strategy of introducing private participationthrough competition rather than takeover (of its terminal)and its extensive efforts to build consensus among the port interests,including labor, as to how to respond to the competitionsucceeded in spreading the management improvements introducedby the concessionaire at least to some degree to the publicsector operations as well.By 2003 Nhava Sheva was regularly handling 100,000 20-footcontainer equivalents per month, and JNP’s throughput had doubledto 80,000. Nhava Sheva succeeded in maintaining more evenand predictable levels of service (such as preberthing delays andship turnaround time) and generally higher operating efficiency. JNPimproved its practices and increased productivity compared withearlier years. Whether Nhava Sheva had beneficial effects onperformance of the neighboring traditional Mumbai port is morequestionable, but while the latter’s scores on the standard indicatorsof port efficiency remain generally in the lower half among India’smajor ports, they have shown some improvement since 1999.Despite continuing weaknesses in India’s management of portservices—especially overcentralization of authority in Delhi, butlack of effective coordination in planning among different (nationaland state) ports and between them and other modes (in additionto the remaining very difficult port labor issues)—the NhavaSheva experiment has led to further private investments: by PSAat Tuticorin in 1998; by P&O at Chennai, Cochin, and Gujarat state’sprivate Mundla port; by APM for a third terminal at Nhava Sheva;by Dubai Ports International at Visakhapatnam; and, most recently,for a potential hub port on an island off Cochin. An important movetoward decentralization and increased local authority was theestablishment of the Ennore port, newly completed at Chennai in2001, as a corporate body instead of a traditional port trust.That led to a very good financial performance.Second was the technical assistance states’ roadproject, because it helped several states substantiallystrengthen the management of their roadsystems.The ongoing projects seem to be attaining theirdevelopment objective, with all projects beingrated as satisfactory. On the other hand, mostprojects experienced implementation and disbursementdelays, which were large in some131

A DECADE OF ACTION IN TRANSPORTcases. As a result, implementation in two of theprojects has been rated as unsatisfactory.IssuesThe following appear to be key issues for the designof future Bank assistance: (i) the adoption ofappropriate design standards and financial mechanismsfor the national highway program, whichassumes a very large component of PPPs; (ii) theneed for better integration of rural roads into thestates’ road networks; (iii) the means to continuea dialogue with the railways and eventually resumelending; and (iv) the achievement of an appropriatetransport portfolio mix, to ensure that itmaximizes the Bank’s impact. The most criticalquestion is the future of urban transport support,where needs are huge and potential rewardshigh, but projects are complex and resourceintensive. An assessment of the ongoing Mumbaiproject should shed more light on this in duecourse.Country Case Study—TanzaniaBank support to a low-income, predominantlyrural economy is assessed in this case study.Transport and the EconomyLocated on the coast of East Africa, Tanzania, witha population of 37 million, is one of the mostpopulated countries of Sub-Saharan Africa. Tanzania’sGDP per capita (at purchasing power parity)is about $600. GDP has been growing at morethan 5 percent per year in recent years. About onethirdof the population lives below the povertyline, and more than 80 percent of the populationis rural.After decades of economic stagnation partly causedby a highly centralized economy, Tanzania’s economybegan to turn around toward the end of the1980s, with the launching of an economic recoveryprogram. Sustained, deeper reforms have takenplace since the mid-1990s and have led to bettereconomic growth. As a result, during the 10-yearperiod until 2005, the economy grew at annual ratesof between 3 percent and 7 percent. Despite theeconomic improvements, poverty in Tanzania remainsdeep and pervasive. The rates of poverty andrural residency are essentially unchanged.Transport bottlenecks are a major hindrance toeconomic growth. Key aspects of these bottlenecksare the poor condition of the road network—morethan two-thirds of the roads are notaccessible year round—and constrained capacityand operations of the country’s railway systems.The strategic location of the Dar-es-Salaam port,serving a number of landlocked neighboring countries,is estimated to give transport (if bottlenecksare removed) the potential to become the country’slargest foreign exchange earner, as well as thelargest contributor to Tanzania’s GDP.Tanzania’s geography, size, diversity, and dispersiongive roads a special position in the integrationof the national economy. In particular, roadsserve rural areas more effectively than any othermode of transport.Tanzania’s trunk and regional road networks aremanaged by the road agency TANROADS. WhileTANROADS’s roads are better maintained thanthose of other authorities, close to half are inpoor condition and are not passable year round.Despite recent reforms, TANROADS is still farfrom achieving the necessary operating and financialautonomy that is required to efficientlymanage the road system (box B.3).Two railway systems operate in Tanzania. The TanzaniaRailway Corporation (TRC), a 2,600-km line,was formed in 1977 after the break-up of theEast African Railways. TRC connects Dar-es-Salaamwith Burundi, Rwanda, the Peoples Republic ofCongo, and Uganda. The Tanzania-Zambia RailwayAuthority (TAZARA) connects Tanzania and Zambiaand is owned by both countries.As part of the economic reforms, the governmentsuccessfully transferred the container terminalof the Dar-es-Salaam port to a privateoperator in 2000, and the port’s traffic, efficiency,and financial results have improved significantly.Attempts started about the same time to privatizethe TRC railway encountered more difficulties, buta concession contract for the transfer of TRC toa private operator is nearing completion.132

APPENDIX B: BACKGROUND PAPER SUMMARIESBox B.3: Developing Effective Road Maintenance Systems in TanzaniaLike most African countries, Tanzania has waged a long battle todevelop adequate systems for maintaining the road networkneeded to serve a large and widely distributed population. The 1994WDR recommended a dual approach to resolving the road maintenanceproblem—with equal emphasis on reliability in the flowof funds and efficiency in their use—and cited Tanzania as a bestpractice case.Within a year or two, however, it became clear that institutionalcapacities in the country were insufficient to bring the new systemsto effective fruition at the same time as implementing a largeroads investment program. Serious questions arose about majorcorruption and misuse of funds in the Ministry of Works.A new approach was gradually worked out, not fundamentallychanging the directions adopted in the early 1990s, but filling themout and giving them a much stronger constitutional foundation. December1998 saw a road fund formally established—in lieu of theone created by official declarations of the Finance Ministry in1991–92. A board of nine persons (including an independent chairpersonappointed by the president, four representatives from theprivate sector, and four senior civil servants) was set to run it. OnJuly 1, 2000, TANROADS (Tanzania National Roads Agency) wasestablished as a semiautonomous agency of the Ministry of Worksto manage maintenance and development of the primary roadnetwork.The mutually supportive public and private sector efforts engenderedby these arrangements have shown several promisingtrends. The road fund board’s extensive monitoring and auditingefforts help to ensure that user charges to support maintenanceare duly collected and used for the intended purpose. Besides regularfinancial audits of recipients (and itself), a major technical auditwas conducted by a Norwegian-South African consortium in2002–03; it concluded that the board was generally receiving valuefor its money and that 90 percent to 95 percent of activities wereachieving the required standard of output.Annual expenditures for road maintenance, which had risen withthe original road fund from a totally inadequate $10 million or lessat the start of the 1990s to the equivalent of $30 million in 1994–95and then fallen off with the problems of that period, reached $48million in 2000–01 and $57 million in 2002–03. The increase camein part from Finance Ministry acceptance of the increase in fuellevy recommended by the board for the latter year. Whereas roadworks had previously been undertaken almost entirely by foreigncontractors or by force account, from the early 1990s considerableeffort had been devoted to supporting development of local contractors,especially for maintenance. Their confidence sufferedsevere blows from the unexpected drop-off in funding after 1995,but TANROADS has resumed training efforts and, in line with generalgovernment policies, about 90 percent of all road maintenanceefforts are contracted out.The combined effort of TANROADS and the board has yieldeda significant reduction in vehicle overloading (fines for which accrueto the road fund) in terms of both scale and incidence, suchthat only 6 percent of the 1 million vehicles weighed in 2003–04 werefound overloaded. Coverage still needs to be extended to otherroads. The long-discussed Road Maintenance Management Systemwas finally established in one zone in 2002–03 and extendedto the other three the following year. The corresponding data collectionhas been actively under way, with an updated network inventorycompleted in December 2003 and work on traffic countsand pavement quality started in 2004.Trends in overall network condition cannot be established witha high degree of reliability, even for the primary network, becauseof uncertainties as to its actual extent, the predominance of graveland earth surfaces subject to rapid change with weather conditions,and the unavoidable element of subjectivity in judgments. Themost valid information available is probably that on the actuallengths (as opposed to percentages of the varying network assumedat different times) that were rated “good” or “fair” in regional engineers’visual inspections. These numbers show relatively littlechange in the extent of primary network rated “fair” (from about9,000 km in 1990 to 10,700 km in 2004) but much sharper growth andfluctuation in the extent rated “good.” That increased from less than3,000 km in 1990 to more than 7,000 km in 1993 before falling overthe second half of the 1990s and rising again thereafter to reachmore than 11,000 km in 2004.Although there is some room for doubt about the validity of thelast figure (because it is much greater than the previous year’s estimateeven though gravel road maintenance had fallen muchshort of the plan in the interim), it indicates that good primary networkdistance may have increased as much as 8,000 km since 1990(this can be compared, for order of magnitude, with the increaseof 5,000 km in the same category in the similarly sized country ofEthiopia between 1995 and 2002).Among further developments being considered, the most importantmay be ensuring the most efficient possible allocation ofthe scarce resources available for maintenance. A very importantinitiative by the board has been to start systematic financialsupport for maintenance of local roads by allocating 30 percent(Box continues on next page)133

A DECADE OF ACTION IN TRANSPORTBox B.3: Developing Effective Road Maintenance Systems in Tanzania(continued)of road fund resources to district and urban councils, as requiredunder the law. The board considers that these allocationsare sufficient for maintenance of only about one-quarter ofthe approximately 50,000 km of such local roads; those for TAN-ROADS can cover about half of the 28,000 km for which it isresponsible.The full inventory of local roads planned will clearly be very importantfor identifying rational priorities in use of the expanding resourcesmaintenance badly needs—and in the development of localcapacities for maintenance management, which are still veryweak. TANROADS’s Maintenance Management System will be ofgreat value to this end, too.The 2003 technical audit of board expenditures also urgedgreater use, in the Performance Agreements that the board negotiateseach year with the agencies that manage the maintenance,of clearly defined and objectively measurable indicators of accomplishment—andgreater readiness to withhold or reduce disbursementswhen monitoring reports show lack of progress.Although TANROADS’s effectiveness has clearly benefited fromits more autonomous status and the improved salary structure andstronger discipline that this made possible, consideration is alsobeing given to the possible advantages of further increasing its independenceand flexibility for meeting the firm set of overall performancetargets agreed with its supervising ministry and the board.Bank Assistance to the Transport SectorTanzania receives approximately $1 billion peryear in international development aid and remainsone of the most aid-dependent countriesin the world, relying on foreign donors for closeto half of its public expenditures. For many years,Bank transport lending was cofinanced by a combinationof multilateral and bilateral developmentagencies. In recent years, however, the level of cofinancinghas radically decreased, largely becausethe overall assistance for transport has decreased.The most recent Bank-supported project, the2004 road project, is cofinanced by just one bilateralagency that provides a small fraction ofthe funding, compared with the Bank’s amount.Other development agencies also provide fundingfor transport, although the number of agenciesand the total allocated to transport has beengreatly reduced, compared with a few years ago.Most agencies are now focusing on the social sectorsor on providing budget support.Bank lending for transport over the past 25 yearshas followed an erratic pattern. During fiscal1981–86, lending was limited to a small port project.The highest level of lending was achievedduring the 10-year period fiscal 1986–95, when itexceeded $50 million a year on average and includedroads, ports, and railway projects. However,40 percent of the 1994 road project was canceled,substantially reducing the Bank’s actual contributionto transport during this period. There wasno lending in this sector during fiscal 1996–2000.During the recent 5-year period (fiscal 2001–05),lending for transport resumed and has reached$122 million.During the fiscal 1981–2005 period, lending forroads accounted for more than three-quarters oftotal transport lending. Most road projects financedroad rehabilitation. They also providedtechnical assistance to the Ministry of Works,mainly to strengthen its road management andmaintenance capacity.The last railway project, in 1990, was intended tohelp TRC become a commercially viable enterprise,operationally efficient and financially selfsufficient.During implementation, it becameevident that its parastatal framework imposed seriousconstraints on efficient commercial operations.In line with the economic reforms, theobjective was changed from helping restructureto assisting with transferring the railway to a privateoperator. Bank involvement with the TAZARArailway did not commence until 2004.Two port projects (in fiscal 1985 and fiscal 1990)had as their main objectives support of the Tanzanianports agency and expansion and modernizationof its facilities. As in the case of therailway project, the objective of the last project waseventually shifted to privatize the container terminal;this was fully achieved.134

APPENDIX B: BACKGROUND PAPER SUMMARIESTransport projects also provided assistance to astate-owned trucking corporation, a study ofurban transport in Dar-es-Salaam, the managementof the Air Tanzania Corporation, and studiesfor the development of a rapid bus transitsystem for Dar-es-Salaam. Public sector managementprojects helped finance the process for involvingthe private sector in ports and railways andassisted in the creation of a new transport regulatoryagency. During the period under review, theBank did not carry out formal sector work, eitherfor the transport sector as a whole or for individualtransport modes. However, internal staff appraisalreports have generally been thoroughly preparedand contain much useful information.Performance of Bank AssistanceSix of the nine transport projects closed sincefiscal 1981 had satisfactory outcomes. These projectsgenerally achieved their physical objectives,which were relevant to the Tanzanian economyand were mostly completed as expected andwithin reasonable costs. The economic returnon the project investments was high, and severalprojects had returns of over 20 percent.The reasons for the three project failures (a railwayand two roads) varied. The railway projectfailed, despite improvements in operations andinfrastructure, because of overambitious goalsregarding improvements in operational efficiency,financial performance, and the time to completetransfer to a private operator. The unsuccessfulroad projects did not improve the condition of theroads to satisfactory levels, and the governmentshowed no commitment to achieve institutionalimprovements. The failed railway and 1990 roadprojects were deemed unsustainable.Three projects were considered to have a substantialinstitutional development impact: twoport projects and the failed railway project. Privatizationof the last and the substantial progresstoward privatization of the railway were deemedto have significant institutional impact. In theport project, performance indicators after privatizationconfirmed that the impact had been real.Two transport projects are currently active. Oneis a 1994 roads project and the other a 2004 transportproject. Both projects appear to be meetingtheir development objectives and making satisfactoryimplementation progress.IssuesThe following appear as being of interest for futureBank assistance:• Funding and autonomy of TANROADS need tobe improved.• The Bank needs to improve its intellectualcontribution through the preparation of policyand strategy papers.• The privatization of ports and (eventually)rail requires strengthening of the regulatorysystems.• Port privatization should advance furtherby transferring further facilities to privateoperators.Special Study—Ghana Joint Evaluationof the Road Subsector Program, 1996–2000In February 1996 the Ghanaian Ministry of Roadsand Transport (MRT) formulated a road subsectorstrategy. Its principal objective was to clearthe backlog of maintenance on a sustainable,long-term basis. This initiative was supported bythe donor community, 4 and at the 1999 GhanaDonors Conference the Terms of Reference wereapproved and a steering committee formed tooversee an evaluation of the program.The objectives of the evaluation were to assess theachievements of the program, with a particularfocus on sustainability; to identify key issues, constraints,problems, strengths, weaknesses, andsuccesses; and to formulate lessons learned to improvefuture interventions in the subsector. An importantaspect of the initiative was the fact that thiswas a joint, multiparty evaluation between thedonor community and the MRT.The road subsector program was only partly realizedand was assessed as too ambitious for boththe funding capacity of the government of Ghanaand the donors, as well as the absorption capacityof MRT and other agencies involved. Futuredonor interventions would remain crucial for theprogram’s sustainability; whereas maintenance135

A DECADE OF ACTION IN TRANSPORTactivities could continue to be funded from roadfund income, new development would require financingfrom external sources. The need for furthertraining interventions remained high.Nevertheless, a sound financial basis for maintenanceand rehabilitation works was establishedthrough the Ghana road fund, which has developedinto the main provider for such funds andbecame operational in September 1997. Between1997 and 1999 the number of kilometers of roadin poor condition was halved. Furthermore, theprivate sector undertook a large proportion of theroad works, and participation targets were met (exceptfor financing). Some progress was also madetoward decentralizing, downsizing, and rationalizingthe road authorities.The evaluation found that environmental andsafety issues should receive greater attention anddisbursement procedures to contractors neededto be streamlined, especially through shorteningpayment approval procedures. Greater prioritywas also recommended for the axle load controlproblem.In a 2005 follow-up study it was reported that theimplementation of the road sector program continuedto be slow. The report identified that futureroad programs may be jeopardized if they cannotclearly indicate their contribution to national developmentobjectives such as poverty reductionthrough a well-functioning monitoring and evaluationsystem. This could lead to a funding reductionbecause of perceptions by donorscontributing to the Multi-Donor Budget SupportSystem. Moreover, the need for further institutionalcapacity building and human resources developmentremained high. The retrenchmentprogram did not materialize. Staff reductions arebased on attrition, so the pace of change is protracted.The inability to launch the retrenchmentprogram leaves the subsector and notably theGhana Highway Authority with a staff compositionunfit for the job and a salary burden that restrictsthe organization in attracting appropriate staff.The need for training remains high.The experiment with greater donor cooperationwas only partially successful. Donors have a varyingset of priorities that, although broadly in linewith Ghanaian societal needs, are not “owned” bythe government of Ghana. Problems also stemmedfrom different donor procedures for implementation,monitoring, accounting, and reporting.The willingness to harmonize these approachesdeserves further exploration, but this is clearly aserious constraint that needs to be workedthrough. This part of the appendix should be readin conjunction with the box 3.1 in the main text.Impact Study—Brazil Secondary andFeeder RoadsThis study dealt with feeder roads in Bahia, financedthrough two Bank projects approved in1976 and 1979. Brazil’s economy had experiencedlarge swings over the past three decades, with highgrowth rates until the mid-1970s, deterioratingconditions reaching negative growth rates in theearly 1980s, and growth resuming thereafter.Bahia, one of Brazil’s northeastern states, reliesheavily on agriculture, which represents some20 percent of the state’s GDP.In 1976, in support of Brazil’s rural developmentstrategy, the Bank shifted its lending for highwaysfrom trunk roads to feeder roads in an effortto connect agricultural production areas withvillages and markets. The two projects financedimprovement of 1,500 km of roads, mostly inclusters or mini-networks, to be built in areaswith good agricultural potential, notably for coffee,cacao, or dairy, but with inadequate infrastructure.Study Scope and MethodologyThe study grouped the roads financed under thetwo feeder roads projects into three regions accordingto their economic activity: the coffee,cocoa, and dairy regions. Out of the 63 roads financed,the study selected 20 roads (forming 15continuous roads) with a total extension of 410 km.Neither of the two road projects identified controlroads. Thus, this study focused on changes, qualitativeas well as quantitative, before and after theroad improvements.The initial field work was conducted in 1993 by thelnstituto Sociedade, Populaqao c Natureza (ISPN,a Brazilian nongovernmental organization), under136

APPENDIX B: BACKGROUND PAPER SUMMARIESIEG’s direction. The ISPN team visited municipalitiesand conducted structured and informal interviewsalong sample roads. The team alsocollected socioeconomic and road data. Complementaryfield work was undertaken in 1996.Impacts—Demographic and Regional ContextThe roads covered in the study served about halfa million people, about two-thirds of whom livedin urban settings and the rest in rural communities.About 20 percent of them were poor: smallfarmers, landless farm workers, and urban unemployedor underemployed.The coffee region extends over a substantial partof the state of Bahia that had traditionally growncoffee on a small scale. In the mid 1960s, Bahiastarted to expand its coffee business. The feederroads were an essential part of this strategy.Cocoa was traditionally one of the most importantagricultural products of the state, but the marketwas hindered by poor roads. Cocoa trees in thestate are mostly in a tropical forest region subjectto heavy precipitation, making road constructionand maintenance expensive. Cocoa is environmentallyfriendly, as it coexists well with the forestcover.The dairy region is located in southern Bahia.Before the feeder road program, only four wheeldrivevehicles could access the existing tracks,and then only during the dry season.Economic ImpactThe improved roads helped expand productionof coffee and cacao, especially when they were firstcompleted. Farmers were able to market theirproducts more easily and to bring in machineryand other modern inputs. Later, a severe drop inthe world market price of these two crops discouragedproduction output.Production of dairy produce was also affected bya drop in prices, but to a lesser extent. The improvedroads allowed the cocoa and the coffee regionsto respond to the collapse in their primarycommodities by diversifying production and movinginto nonagricultural activities.Social ImpactOne important impact was the change in landtenure: the proportion of small landholders increasedsignificantly in all three regions. Other indicatorsshowing significant improvement werethe availability of hospital beds per inhabitantand school attendance by school-age children.Yet, because of the lack of control roads, the extentto which these changes could be attributedto the roads is uncertain.Traffic ImpactOverall, traffic on the roads increased substantially,although it remained below original forecasts.Traffic increased from 20 to 40 vehicles per day onmost roads in the late 1970s to 100 vehicles perday in 1996 in 12 of the 20 roads in the sample.The roads with the higher traffic levels were thosethat became integrated with the state road networksand that were more important for longdistancetravel.Environmental ImpactBecause road improvement work generally followedexisting tracks, the environmental impactof road construction was minor and occurredmainly in the cocoa region. This was because ofconditions that led to erosion. However, deforestationwas common in all three regions.Economic Analysis and BeneficiariesLack of agricultural output data and prices madeit impossible to produce the economic analysis atappraisal, based on induced agricultural production.Instead, the study calculated a benefitcostratio based on 1996 traffic and on vehicleoperatingcost savings. Twelve of 20 roads had asatisfactory benefit-cost ratio.The initial beneficiaries were the large agriculturalproducers. The road improvements alsohelped improve standards of living and access tosocial services. All interviewees in the dairy regionthought that the improved roads brought positivebenefits; only three-quarters thought so in thecocoa region.SustainabilitySome 10–15 years after the improvements werecompleted most of the roads were still in fair to137

A DECADE OF ACTION IN TRANSPORTgood condition. About a quarter were in poorcondition. Funding for highway maintenance generallyhas suffered during the devolution of responsibilitiesfrom the federal to the stategovernments in the 1990s. Liberalization andgrowth-oriented policies over the past 10 yearsshould help make the economic and social impactssustainable.RecommendationsThe study makes the following recommendations:• Feeder road planning could be improved byconsidering clusters or mini-networks of roadsfitting into a state and regional developmentstrategy and by considering social impacts inaddition to economic benefits.• Environmental assessment and mitigationmeasures should be launched at the roadplanningstage.• Beneficiaries, including the private sector,should be involved in the process of fundingand managing maintenance of rural roads.• A simple monitoring system, including periodictraffic counting and a few selected social indicators,should be set up to facilitate evaluationof the road investments.• Research on the benefits from avoidance ofroad closures should be undertaken by a Brazilianresearch center.Impact Study—Morocco: SocioeconomicInfluence of Rural RoadsDespite sustained urbanization through the 1980sand 1990s, about 50 percent of Morocco’s populationremains rural. Rural inhabitants have benefitedless from the country’s economic growthover the past decade than urban dwellers; morethan 70 percent of the poor population lives in ruralareas. This report sought to understand the impactsthat emanate from improving rural roads and howthey influence the agricultural economy and thesocial sectors. The intention was to better assessthe long-term value of investing in rural roads.MethodologyThe study assessed the impact of paving andother improvements financed under the Bank’sfourth highway project (approved in March 1983and improvements completed between 1987 and1991) to four rural roads, originally with gravel orearth surfaces, located in three regions of Morocco.The study considered impacts on transportinfrastructure and services, the agricultural economy,the social sectors such as health and education,and the environment.For each of the roads considered, the study comparedcurrent conditions with those before the investmentsand conditions in the project roadrelative to a control road that did not benefitfrom improvements over the period of the study.Data were obtained from extensive surveys conductedat the farm, region, and village levels, andfocus group discussions at these levels helpedinterpret the data.ImpactsOn Transport Infrastructure and ServicesThe most direct impact was elimination of frequentroad closures during rainy periods. Otherbenefits included reduced vehicle-operating costs;use of larger, more efficient trucks; increasedroad passenger services, especially share-ridetaxis offering frequent service; increased ownershipof motorized vehicles, both of cars and trucks;and greatly reduced time to reach markets and socialservices. This improvement was a result ofboth better roads and new facilities, whose constructionwas made possible in part by the roads.On AgricultureThe study found that in the road project areasoverall volume of production, productivity of theland, and monetary output increased. Farmerswere able to shift output from low-value cerealsto high-value fruit orchards, thanks to the betterquality and year-round operability of the improvedroads. Livestock production shifted toward purebredcows, also a higher-yield undertaking. Thebetter access conditions, moreover, resulted in anincreased use of fertilizers and of agricultural extensionservices.Improvements in the agricultural economy led torelated economic changes in workloads and onfarmemployment and the establishment of new138

APPENDIX B: BACKGROUND PAPER SUMMARIESshops. Off-farm employment grew overall by morethan six times in the project zones, compared toabout three times in the control zones.On Social ServicesEnrollment in primary education increasedthroughout all areas covered by the study; it increasedat a much higher rate in the areas wherethe roads were improved than in the controlareas. In parallel, the quality of education improved,as it became possible to recruit teachersto staff the schools, and absenteeism of bothteachers and students fell.The rural population also nearly doubled its useof hospital and primary care facilities, and thequality of health services was enhanced as thesupply of medicines improved. Health officialslaunched a campaign to staff rural health carecenters with a doctor, and health prevention programsbecame easier to implement.Some social impacts were especially large forwomen: Girls’ enrollment in primary education trebledover the period; expanded or new maternaland child care programs were made available andaccessible; and the introduction of butane at affordableprices thanks to better roads dramaticallyreduced women’s chores of daily fuel wood collectionfor cooking and heating. Rural-urban interactionincreased through increased family visits.On the EnvironmentChanges in transport conditions and in the agriculturaleconomy had both negative and positiveimpacts on the environment. Overall, no environmentallysensitive areas were put at risk by theroad-improvement projects. Negative impacts resultedfrom the increased traffic and economicactivity, especially air and noise pollution and roadaccidents, as well as the increased used of fertilizersand other chemicals that may contaminatethe water table. Positive impacts resulted fromthe transformation of the agricultural economy—notably, curtailment of extensive goat and sheepherding that damages the soil cover and increasedtree plantations—and from broader substitution ofbutane for fuel wood, the demand for which islarger than the size of Morocco’s sustainable forests.Economic AnalysisThe study quantified the savings in vehicleoperatingcosts compared with the original, unpavedroads, and the economic gains resultingfrom people and freight being able to move at anytime, without the risk of road closures. Social impacts,although real, could not be quantified in theanalysis. The ERRs (between 16 percent and 30percent) were satisfactory. The analysis, however,did not demonstrate whether paving was the optimaleconomic solution.Sustainability of BenefitsHistoric trends showing steady traffic growth overlong periods on Morocco’s paved roads suggestthat the stream of benefits is likely to be sustainable.The improvement of the agricultural economyis likely to be sustained, with the possibleexception of the sugar beet planting in the north,which is uneconomic and may lose its market. Thegains in agriculture are also dependent on governmenttrade and fiscal policies. Social service impactsappear sustainable in view of the high valueassigned to them by the direct beneficiaries andbecause of government policies and the increasedfunding it is allocating to improve social services.RecommendationsThe study recommended that consideration begiven to (i) establishing a practical rural roadmonitoring system, (ii) increasing local communityparticipation in rural roads, (iii) introducingmitigation measures to reduce likely increases inroad accidents, (iv) adopting identification andevaluation methodologies based on multicriteriaindicators, and (v) reassessing the optimal pavementwidth for rural roads.139

APPENDIX C:MIGA SUPPORT FOR TRANSPORT PROJECTSThe Multilateral Investment Guarantee Agency(MIGA) was founded in 1988 with the mandate topromote foreign direct investment into developingcountries. To fulfill this mandate, MIGA offersfour products and services: it insures investorsagainst political risks, which include expropriation,transfer restrictions, war and civil disturbance,and breach of contract. MIGA also mediates disputesbetween investors and governments; providestechnical assistance to help governmentsattract foreign investment; and provides informationon investment opportunities through onlineservices. 1MIGA and Bank Group StrategyAs private sector interest in infrastructure andtransport projects increased in the 1990s (figureC.1), the World Bank shifted toward complementingprivate investments with policy and regulatoryreforms and institutional capacity building,and Bank lending for infrastructure and transportationprojects declined. Conversely, MIGAinsured its first transport project in 1995, and theAgency’s guarantee projects in this sector reacheda peak in 2001–2003.In 2000, MIGA’s strategy set forth the increased facilitationof complex infrastructure projects as apriority, citing significant growth in private participationof this sector during the previous 10years and record demand for MIGA’s services.These projects were generally highly capitalintensive,had long pay-out periods of 10–20 years,and often involved concession agreements withpublic entities (MIGA 2000, p. 54). Within thisfocus on infrastructure, transport projects accountedfor approximately 6 percent of new MIGAguarantees (measured by gross guarantee volume)each year during fiscal 2001–03, and over8 percent in fiscal 2006 (figure C.2). 2 However, althoughoverall MIGA guarantees for infrastructureprojects have remained strong if somewhatFigure C.1: Private Sector Investment in Transport Projects, 1994–200525,000US$ millions20,00015,00010,0005,00001994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005YearSource: World Bank PPI database.141

A DECADE OF ACTION IN TRANSPORTFigure C.2: New Transport Project Guarantees, Fiscal 1996–20061409.001201008.007.006.00$US millions806040205.004.003.002.001.00Percent01996 1997 1998 1999 2000 20012002 2003 2004 2005 20060.00YearGross liability transport sector(left axis)Transport sector share of MIGA’stotal new gross liability (right axis)volatile, guarantees for transportation projectsdropped during fiscal 2004 and 2005.MIGA Portfolio OverviewAs noted above, MIGA exposure in the transportsector has been modest. From fiscal 1990 to fiscal2006, MIGA issued 36 guarantee contracts for12 projects totaling $424.2 million in this sector(figure C.2). Cumulatively, this represents 2.8 percentof MIGA historical gross exposure. As of June30, 2006, MIGA’s active transport portfolio was$221.4 million, accounting for 4.1 percent of itsoutstanding gross portfolio, 3 and eight of the 12projects remained in the portfolio. 4Toll roads accounted for the largest share of transportprojects, both in terms of the number ofprojects and their guarantee exposure (four projects,and 51 percent of exposure), followed byairports/airlines (three projects, 20 percent of exposure),and ports (three projects, 8 percent ofexposure) (figure C.3). Three of the first fiveMIGA guaranteed transport projects were tollroads, but those insured after 2001 were primarilyin port and airport/airline projects, followedby a large toll-road project in fiscal 2006.Consistent with the privatization trends in the1990s, the large majority of MIGA’s exposure intransport projects (75 percent of exposure, and8 of 12 projects) was in Latin America. The remainingprojects were in Asia (21 percent of exposureand two projects), Africa (3 percent ofexposure and one project), and Europe and CentralAsia (1 percent and one project) (figure C.4).MIGA’s transport projects have been concentratedin middle-income countries (96 percent of exposure).Half of MIGA transport projects were inlower-middle-income countries, accounting for agross exposure of 69 percent. These projects includedkey infrastructure improvements in countriessuch as Ecuador, Peru, and the Philippines,where perceived risk was relatively high and/or investorsrequired specific coverage to obtain financing.Only four percent of MIGA’s cumulativeexposure (two projects) was in low-income/IDAeligiblecountries, including one project in Sub-Saharan Africa.While MIGA’s transport portfolio was concentratedin Latin America and the Caribbean, and toa lesser extent in Asia and the Pacific, large pri-142

APPENDIX C: MIGA SUPPORT FOR TRANSPORT PROJECTSvatizations or public private partnerships in Centraland Eastern Europe have not obtained MIGAcoverage.Figure C.3: MIGA Gross Expenditure byProject Type, Fiscal 1990–2006Most of MIGA’s transport projects involved complexconcession agreements or licenses specifyingtariffs, performance benchmarks, and otherparameters critical to the project’s viability. MIGAappears to have met a demand from foreign investors,entering a relatively new area for the privatesector.Ports8%Other21%Roads51%Effectiveness of Guarantee ActivitiesIEG-MIGA carried out ex post evaluations of twoMIGA-supported transport projects—an airport facilityand a toll road. Both projects involved theprivatization, modernization, and expansion of existingfacilities where host governments soughtprivate financing and management. The projectswere designed to meet future increases in demandand upgrade outdated facilities to currentinternational standards in their sectors, and to improvesafety. Ultimately, the projects were expectedto contribute to the host country’s privatesector development and economic growth. Theconcession agreements for these projects wereawarded in the 1990s, when private participationin the provision of infrastructure peaked.IEG-MIGA’s evaluations have highlighted findingson project beneficiaries, concession agreementsand the sustainability of the projects, environmentaland social effects, and MIGA’s role andvalue added in the two transport projects.Project OutcomesBoth projects helped to transform the deterioratinginfrastructure into modern facilities designedand equipped with the appropriatetechnology and specifications to meet currentinternational airport and highway standards. Thequality of service has also vastly improved. Efficiencygains were also achieved in both projects,for instance, by greatly reducing the processingtime for air cargo, benefiting exporters and importers.Similarly, the toll road has considerablycut vehicle-operating costs, travel time, accidents,and crime along the highway.Airports/Airlines20%Figure C.4: Issued Gross Exposure byRegion for Transport Sector Projects,Fiscal Years 1990–2006Europe/Central Asia1%Asia21%Latin America75%Africa3%At the same time, the modernization and privatizationof these two facilities means that usershave to pay higher prices for the services, comparedwith before the privatization, when theywere operated by public sector entities. Usercharges have been a contentious issue in bothprojects. Actual volume of traffic and revenues arebelow expectations for both, although the revenuesgenerated by each project are sufficient tocover operating costs, accelerated debt service,and fiscal obligations; in one case revenues alsoallowed payment of shareholder dividends.143

A DECADE OF ACTION IN TRANSPORTBeneficiariesThe main beneficiary in the airport project hasbeen the host government, as revenue generationwas the main impetus for privatization, and theconcession agreement reflects this objective. Airlinepassengers—both local and foreign—and aircargo companies also benefited from efficiencygains, although the net effect is smaller becauseof increased user charges, which are higher thanfor comparable airport facilities in the Region.The impact on the private sector has been limitedbecause of the structure of the concession agreement,which restricted the entry of other providers.In the case of the toll road, the host country’smotivation for privatization was the repair of adecaying road infrastructure, which was to be thelinchpin of Regional economic revitalization. Themajority of the beneficiaries of the toll road aremiddle-income public transportation passengers,high-income car owners, and commercial users.The company has also introduced targeted subsidiesto low-income transport operators. Governmenttax revenues have been lower thanexpected, as a result of lower traffic volume. Thatcomes mainly from high tolls, an increase in gasolineprices, and an economic slowdown in thecountry. Although the owners of public transportationcompanies, trucking services, and privatepassengers benefit from efficiency gains,effects on the Regional economy are not yet significant.However, some commercial developmentof land near the toll road has started.Concessions and Sustainability of ProjectsAs noted above, the majority of MIGA transportprojects involved complex concessions or licenses,and both evaluated projects were covered bylong-term concession agreements. In recent years,MIGA has been notified about disputes betweenits guarantee holders and government entitiesrelated to transport projects. Investors filed twoclaims that were related to provisions in the concessionagreements, such as tariff rates, allegationsof being in breach of concession agreements, oroutright abrogation of concessions.The concession agreements in the two evaluatedprojects resulted from competitive or solicited biddingprocesses. In both cases, commercial risksare borne by the project enterprise. Affordabilityof tariffs or fees, which are set in the concessionagreements, has been a common concern withboth projects. In both cases, there have beenchallenges in sustaining the projects, albeit for differentreasons. In the case of the airport facility,the distribution of revenues stipulated in the concessionagreement is not sustainable, and it hasnot had the intended impact on the country’s privatesector development. The concession did notlead to lower prices for users and has added constraintson future competition in the sector. In thetoll-road project, the main challenge is increasingusage to improve the financial performance andsustainability of the enterprise.Environmental and Social ComplianceAs required by the concession contract, the airportfacility has carried out remedial pollutioncontrol works on the project site and set up anenvironmental and health and safety managementsystem covering all the areas of the siteunder its control. At evaluation, it was in full compliancewith MIGA’s safeguard policies.The toll-road project did not fully follow WorldBank provisions for involuntary resettlement of affectedpeople; at the time of the evaluation, anamended Resettlement Action Plan and CorrectiveAction Plan were being implemented to addressthese deficiencies. Although these plansrectify some of the earlier shortcomings, IEGfound that the effectiveness of these plans was low,in part because of the delays in their execution andpoor design and implementation of the relocation.MIGA’s RoleMIGA played a particularly important and catalyticrole in the airport facility. In the toll road,its coverage was important, but it came after financingwas finalized. Also, its value-added waslimited to providing political risk coverage, becauseIFC took the lead.In the airport project, MIGA’s coverage was securedbefore the lenders provided financing;MIGA support was instrumental in that it providedcoverage of a performance bond, which144

APPENDIX C: MIGA SUPPORT FOR TRANSPORT PROJECTSwas not available from private insurers on a longtermbasis and was critical for the investment togo forward. Coverage was also important becauseof the uncertain political environment at the timethe guarantee was issued.Prior RecommendationIEG-MIGA previously made a recommendation toMIGA covering its involvement in projects with concessionagreements, which is relevant for the twoevaluated transport projects (IEG-MIGA 2006, p.46). It recommended that MIGA develop rules ofengagement for projects involving concessionsand similar agreements. Considering that MIGAoften gets involved in projects as an insurer aftersuch agreements have been negotiated and signed,it needs to satisfy itself that the underlying businessmodel, terms given to concession holders, andtariffs are sustainable and reflect sound economicpolicy to ensure a positive development impact. 5145

APPENDIX D:IFC’S EXPERIENCE IN THE TRANSPORT SECTORThe International Finance Corporation’s (IFC’s)IEG reviewed IFC’s investments in the transportsector between 1990 and 2005. IEG found severalthings:• Between fiscal years 1990 and 2005, IFCmade 125 transport commitments supportingprojects with a capital value of $14 billion,investing $2.2 billion for its own accountand mobilizing $1.4 billion of B-loans. 1 On average,transport investments have accountedfor about 6 percent of IFC commitments.• Since 1998, when IFC made transport a priorityas part of a strategy to support infrastructuregenerally, it has succeeded inincreasing its transport investments in absoluteterms and as a proportion of the portfolio.Two-thirds of IFC transport investmenthas been in the Latin America and theCaribbean Region.• Transport projects have achieved a significantlyhigher proportion of positive developmentoutcomes compared with othersectors in IFC. Their economic sustainability,environmental and social impacts, andcontribution to private sector developmenthave been particularly strong. 2• Though profitable, the returns on IFC’s investmentsin transport projects have beenlower than average. This reflects a numberof factors, including IFC’s instrument mix,slower than expected growth in traffic, strongcompetition from other transport operators,economic crises, and changes in governmentpolicy.Transport a Strategic Sector for IFCSince 1998, IFC has prioritized its support fortransport projects in developing economies. Thisreflects the importance of a country’s transportationsystem for moving goods and people domestically;it also shows it is a prerequisite for tradewith other nations. IFC has helped developingcountries improve their transport systems throughits investments in private sector companies thatprovide air, rail, road, and sea transport; port andharbor operations; and other linked services,such as warehousing. Through a process of privatizationand/or the award of concession contracts,many of these private companies haveassumed responsibility from governments for upgrading,operating, and maintaining a country’sexisting transport infrastructure.IFC Has Increased Its TransportInvestmentsIn the fiscal 1990–2005 period, IFC supportedtransport projects with a total capital value of$14 billion. As part of its support, IFC committed$2.2 billion for its own account that was split withapproximately 90 percent as loans and 10 percentas equity. In addition, IFC raised $1.4 billion in theform of B-loans from other lenders, a high mobilizationrate relative to other sectors. The balanceof project funds was raised by sponsors and otherprivate investors. Transport investments representan increasing proportion of IFC’s portfolio,accounting for 4.1 percent of commitments in theperiod fiscal 1990–95, 6.1 percent in fiscal1996–2000, and 6.9 percent in fiscal 2001–05 (seetable D.1 and figure D.1). The transport portfoliois therefore relatively young, a third of all investmentshaving been committed in fiscal 2003–05.The proportion of IFC investments dropped betweenapproval and commitment was much lowerfor transport, at 3 percent during the 1990–2005period, compared with 16 percent for all other147

A DECADE OF ACTION IN TRANSPORTTable D.1: IFC Supported a Variety of Projects within the Transport SectorFiscal 1990–2005 No. of Total Aggregate Aggregate Aggregate(in US$ millions) projects project size B-loans IFC loans IFC equityAirports and airlines 7 797 13 132 15Passenger and freight rail 16 1,219 136 254 26Shipping companies 17 973 201 211 52Transit and ground passenger transport 4 2,043 0 127 10Oil and gas transport or pipelines 13 1,856 466 244 14Port and harbor operations 38 2,380 196 453 30Highway operations (including toll roads) 11 2,433 161 224 42Other support activities for transport 13 2,095 250 297 37Storage and warehousing 6 134 8 48 1Total 125 13,930 1,431 1,990 227Fiscal 1990–95 Fiscal 1996–2000 Fiscal 2001–05Subsector No. of Net No. of Net No. of Net(Figures in US$ millions) projects commitments projects commitments projects commitmentsAirports and airlines 0 0 0 0 7 147Passenger and freight rail 2 26 5 52 9 202Shipping companies 7 91 2 48 8 124Transit and ground passengertransport 0 0 3 100 1 37Oil and gas transportor pipelines 8 105 3 87 2 65Port and harbor operations 8 56 16 147 14 280Highway operations(including toll roads) 1 14 8 190 2 64Other support activitiesfor transport 1 40 4 109 8 185Storage and warehousing 1 6 3 25 2 18Total 28 338 44 758 53 1,122sectors. Cancellations of commitments werealso lower for transport, at 0.3 percent versus 3.7percent.Two-Thirds of IFC’s Transport Investmentin Latin American and the CaribbeanIFC’s transport portfolio has a strong bias towardthe Latin America and the Caribbean Region,which accounts for 67 percent of transport commitments,compared with 37 percent for other sectors(see figure D.2). By extension, IFC’s transportcommitments are relatively underweighted inother Regions, although there has been a noticeableincrease in the Europe and Central AsiaRegion since 2002.This pattern of concentration in Latin American andthe Caribbean and more recently in Europe andCentral Asia reflects the progress in these Regionstoward privatization of transport infrastructureand contracting with the private sector to delivertransport services. Commensurate with that, theytend to have a better institutional and regulatoryframework to support private investment in the148

APPENDIX D: IFC’S EXPERIENCE IN THE TRANSPORT SECTORFigure D.1: IFC Investment in Transport Growing in Volume and as Proportion ofPortfolio60012Volume of commitments (US$ millions)500400300200100108642Percentage of total IFC commitments01990 1992 1994 1996 1998 2000 2002 2004Fiscal year of commitmentB-loansEquity and quasiequityLoans and quasiloansPercent of total IFC commitments0Source: IFC data.Figure D.2: Most IFC Investment in Transport in Latin American and the CaribbeanAfrica3%Asia17%Africa8%ECA12%LAC37%Asia25%LAC67%Gross commitments in transport sectorMENA1%MENA9%ECA21%Gross commitments in other sectorsSource: IFC data.Note: LAC = Latin American and the Caribbean; ECA = Europe and Central Asia; MENA = Middle East and North Africa.149

A DECADE OF ACTION IN TRANSPORTBox D.1: IFC Supported Brazil’s Port Privatization ProgramBrazil’s ports had long suffered from low productivity, high operatingcosts, and inadequate maintenance. Handling charges in Brazil wereroughly double that of international ports, and these high chargesand inefficiencies were estimated to cost Brazilian exporters up to$5 billion per year in lost export opportunities. As part of its programto increase the competitiveness of the Brazilian economy, the governmentof Brazil passed a ports modernization law in 1993 thattransferred port administration to state port authorities and requiredthat the private sector operate the ports. IFC has assistedin this privatization process by providing funding to the new privateoperators for upgrading and expanding port facilities. For example:• IFC supported the rehabilitation and expansion of the containerterminal at the Port of Rio Grande, following the award of a 25-year lease in 1997 to a private consortium. IFC helped the companypurchase four cranes, expand the length of the quay, andrepair and upgrade existing facilities. The $50 million project hasenhanced transport logistics for southern Brazil, resulting in increasedexports, and created local employment with more skilledand better-paid jobs. The private operator introduced new technologyand know-how and achieved a 234 percent increase inproductivity over a 5-year period, increasing container moves from80,000 per annum to over 300,000, well ahead of forecasts.• The Port of Salvador in the state of Bahia in northeast Brazil wasprivatized in 2000 with the award of a 25-year lease to a privatecompany. IFC arranged funding for part of a $20 million projectto purchase two portainers and container-handling equipment,paving of the container storage area, and construction of awarehouse and administration buildings. The private operatorplayed an important role in increasing overall container volumesby nearly 300 percent between 2000 and 2005. As a successfulproject in a relatively poor and less-developed part ofBrazil, it played a vital role in increasing exports from the Region,attracting other firms into the area (including Continental, Bridgestone,Pirelli, Monsanto, and Ford) and inducing follow-on investmentsin local transportation logistics.• The government-built (and previously unused) container andsteel products terminal of Sepetiba is being operated under a25-year lease awarded by the Port Authority of Rio de Janeiroin 1998. IFC is assisting the new private operator in a phased$140 million redevelopment of the container terminal, includingthe purchase of seven cranes, conversion of an existing dolphinberth into a straight quay, and the construction of a railconnection. Largely because of the intense competitive reactionfrom the neighboring port of Rio, Sepetiba’s operations interms of container moves and profitability have not yet met expectations.The project has, however, helped reduce congestionat ports across southeast Brazil, and the increasedcompetition has resulted in a dramatic drop in tariffs for importersand exporters.sector (see box D.1). Also, in middle-income countriesgenerally—and the large economies in LatinAmerican and the Caribbean and Europe and CentralAsia are no exception—one of IFC’s roles hasbeen to help improve the transport sector andstimulate export-led growth through trade.As a consequence, 92 percent of IFC investmentin transport has been in middle-income countries;of that, 72 percent has been to trading infrastructurerather than to mainly domestictransport systems.Much of Technical Assistance Focusedin AfricaIFC has also supported the transport sector withtechnical assistance and advisory services deliveredby its Trust Funds (TATF) and Advisory Service Departments.Between fiscal 1990 and 2005, TATFsupported 39 projects with a total cost of $5 million—thiswas about 3 percent of total TATF activityover the period in terms of number andcost.Just over half of these projects (40 percent bycost) were in frontier countries, particularly in theAfrica Region. In contrast to Latin America and theCaribbean, private participation in transport infrastructurein Africa is relatively low. Thus, establishingthe right legal and regulatory frameworkis an important precursor to increased privateinvestment in the future. Typically, TATF projectswere related to privatizations and feasibility studieson private operation of ports and shipping, air150

APPENDIX D: IFC’S EXPERIENCE IN THE TRANSPORT SECTORtransport, and cargo facilities. IFC also completed13 advisory service assignments in transport, accountingfor 16 percent of total advisory activities.Again, slightly more than half of this advisorywork was in Africa, and nine of the assignmentswere in airlines and airports.Transport Yielded Strong DevelopmentImpactsAmong a sample of 22 IFC transport investmentsevaluated between 1996 and 2004, 19 achievedhigh development outcomes (86 percent by numberand 75 percent by volume); 15 achieved highinvestment outcomes (68 percent by number and58 percent by volume). 3 Fifteen (68 percent bynumber) achieved “win-win” outcomes, indicatingthat at the individual investment level they madea satisfactory-or-better contribution to developmentin a country and yielded a satisfactory-orbettergross profit contribution toward IFC’s financialcapacity for future development outreach.These results compare favorably to projects inother sectors across IFC (see figure D.3). 4The development impacts of IFC’s projects areevaluated based on multiple attributes of theircontribution to a country’s economic development,and ratings are based on a synthesis of theirperformance across four underlying indicators:commercial success, economic sustainability, environmentaland social impacts, and contributionto private sector development. The evaluatedtransport projects supported by IFC have yieldedbetter-than-average impacts in all four indicators.In particular, they have made strong contributionsto economic growth; their ERRs have beensubstantial and in all cases have exceeded their financialrates of return, indicating that they havegenerated benefits for other members of societybeyond the project company’s owners and financiers.On average, for each $1 invested, theevaluated projects returned $1.50 in financialbenefits and $2.25 in economic benefits.These projects have also tended to have lasting,positive impacts on the enabling environment.An example of such a project is a concession tollroad between two large cities in a South Americancountry. Large economic benefits were unlockedby upgrading the road and enabling moreefficient commercial transportation between thetwo cities, plus improved safety measures resultedin a significant drop in accident and fatality rates.Figure D.3: Outcomes of Evaluated Transport Projects Compared with Thosein Other Sectors86%58%Development outcomeLOW HIGH18%2High developmentoutcomeLow IFC return68%High developmentoutcomeHigh IFC return14% 0%Low developmentoutcomeLow IFC return4 31Low developmentoutcomeHigh IFC return68%Development outcomeLOW HIGH15%2High developmentoutcomeLow IFC return43%High developmentoutcomeHigh IFC return31% 11%Low developmentoutcomeLow IFC return4 31Low developmentoutcomeHigh IFC return54%LOWInvestment outcome oftransport projectsHIGHLOWInvestment outcome ofother projectsHIGHSource: World Bank data.151

A DECADE OF ACTION IN TRANSPORTMoreover, the project helped improve the structuringand administration of subsequent concessioncontracts in the country.Net Returns on IFC’s Transport PortfolioLower than AverageWhereas the development impacts of transportprojects have been strong, the returns on IFC’sinvestment portfolio in the sector have laggedbehind those across IFC as a whole. Overall, transportinvestments yielded a net profitability rate of0.4 percent, compared with 2.6 percent for IFCoverall (table D.2). 5The lower profitability is due in part to IFC’s transportloan portfolio, which has carried loss reservesabove the IFC average since 2003. It is also due toIFC having made relatively few equity investmentsin the sector when across all sectors on average,equity investments tend to be the main contributorsto IFC’s profits. Moreover, where transportprojects involve concessions, the complexity ofthe contracts and lead time for IFC appraising andstructuring its investment results in high administrativecosts and further pressure on profitability.Lessons from the evaluated projects provide furtherinsights on the pattern of development andinvestment results in the transport sector:• Growth in traffic may be slower than forecast.Traffic or volume forecasts prepared bysponsors may have an upward bias, possibly asa result of the competitive pressure to win a concessionand possibly to make the project moreattractive to investors. In practice, actualthroughput can be lower than forecast or requirea longer growth period to reach target levels.Hence, the income generated may not besufficient to service the company’s loans, and/orequity income for investors will be delayed (depressingrates of return). On the other hand,Table D.2: IFC Investments in Transport Yielded a Net ProfitNet profitability rates for investments active in fiscal 1990–2005 Transport portfolio All IFC(percent of outstanding amounts) (%) (%)Loan portfolioAverage loan outstanding balance 100 100Interest received 6.4 7.1Fees received 0.7 0.7Loan loss provisions (3.2) (1.9)Cost of funds (before swap effects) (3.4) (4.4)Administrative expenses (2.3) (2.2)Loan net income (1.8) (0.6)Equity portfolioAverage equity outstanding balance 100 100Dividend income 3.9 6.0Realized gains on sold/closed investments 6.0 5.3Administrative expenses (2.4) (2.4)Active investmentsCurrent valuation (net of provisions) 8.7 19.4Original cost or disbursement (7.2) (13.7)Unrealized gains on active investments 1.5 5.7Equity net income incl. unrealized gains 9.0 14.6Total net income including unrealized gains 0.4 2.6152

APPENDIX D: IFC’S EXPERIENCE IN THE TRANSPORT SECTORthe benefits of improved services, faster journeytimes, and increased safety are realized immediatelyby users and the economy.• There may be competing transport infrastructure.Many projects are expected to thriveby offering new, more efficient infrastructureand services to customers. Container ports area good example of an unexpected and strongcompetitive response from existing nearbyports, which may be state owned or privatelyoperated. Competition may take the form ofsubstantially lower—often unsustainable—tariffsor customer tie-in arrangements, and whileit may not last for an extended period of time,it can adversely affect IFC-supported projectsin the early years of operation and cause financialstress. Customers, however, benefitstraightaway from reduced prices and in thelonger term from improved services.• Concession contracts may not provide theprivate operator with the protection envisaged.Robust traffic projections and strongsponsors may not be enough to mitigate thenegative impact of major changes in governmentpolicy, particularly in a country where thelegal and regulatory framework is not well developed.Although concession contracts mayallow the private operator to raise charges toend users to protect it from inflation or devaluation,such terms may be unenforceable ifthey are politically unpalatable, for example, ata time of economic crisis.153

APPENDIX E:BANK TRANSPORT STAFF INTERVIEW RESULTSA random selection of 36 out of 122 staff (specialistsand task team leaders) was made; 20 fromWashington, DC, headquarters; 16 from Regions.Regions:Dates:All Regions and anchor 1 covered.Interviews conducted betweenAugust 2005 and February 2006Assessment of Client Needs (Relevance)In which countries have you worked in therecent past? (last 5 years).Detailed list contains 67 countries, covering allRegions.To what extent has maintenance been aproblem in these countries in yourexperience?ROADS: Most interviewees confirmed that sustainabilityis still a problem; they mentioned weakfunding flows, road funds that were only modestlysuccessful, weak institutional capacity, lack of governmentcommitment, maintenance based on equityor political considerations rather than need, andnetworks too large for available funds. Positivetrends were experienced in a few countries, andthere has been some success with road authorities,maintenance management systems, and capacitybuilding both for governments and contractors. InAfrica the SSATP is believed to have a positive impact.Performance management contracts have hadsome success, especially in Latin America (CREMA).RAIL: Only minor problems reported.OTHER MODES: Not seen as problem areas.To what extent has the Bank assisted thesecountries in the transport sector throughtechnical assistance and advisory services?There is not enough ESW in some cases; technicalassistance is often not done soon enough andsometimes lacks ownership; technical assistancefrom other international finance institutions (IFIs)(sometimes of low quality and offered on a grantbasis) can be a problem; some countries are wellsupported by donors, and in these cases there isno shortage of funds for technical assistance—butother countries are comparatively neglected. Absorptioncapacity of technical assistance can be anissue, as is the lack of continuity and institutionalmemory. Some respondents felt that institutionaland policy support was relatively less successful,but good results were reported for procurement.Most people thought that technical assistancewas more effective when it was linked to investmentsrather than when it was a freestanding initiative.Dissemination of knowledge was oftencarried out on an ad hoc basis.The Bank has a good reputation for high-qualitywork and is close but not necessarily at the cuttingedge of knowledge in roads. It has a uniquedepth of resources and is particularly good at assistingwith road financing. The SSATP is seen asdoing good work at the strategic level.Some countries (Iran, Kuwait) have been more focusedon acquiring know-how and skills.To what extent has the Bank encouragedthese countries to get involved with theprivate sector? Please give examples, ifpossible.155

A DECADE OF ACTION IN TRANSPORTConcessions were mentioned for several countries,especially in railways and ports; there werealso a few toll roads. Most concessions appear successful,but some respondents mentioned difficultiescaused by collusion. Some respondentsnoted that key success factors included being involvedat the earliest possible stage, having thecapacity to deal with the private sector, and havinga supportive regulatory framework. The factthat the Bank can now cover the cost of redundanciesin loans is seen as significant. The Bankhas also had successes in assisting the developmentof emerging contractors and phasing outforce account operations and in developing competitivebidding and procurement procedures,as well as performance maintenance contracts.In ports there are good opportunities for contractingthe cargo handling services. Trade facilitationcommittees involving the private sectorhave proved successful.Public institutional change in Asia is less rapid, becausetraditional practices are valued highly andincremental change is often preferred. The “confrontational”style of Western practice (competitivetendering, staff rationalization, and so forth)is disliked by many.Bank ApproachGeneral CommentsSome interviewees thought the Bank was toorisk averse, although others believed that a5-year project horizon was often too short toachieve meaningful institutional change and thatthe Bank should not be too ambitious to achieveeverything in one project.“Continuity can be important. The Bank shouldthink very carefully before it stops support to aborrower because of nonperformance or seriousdisagreement. Once we walk away, we lose ourability to influence, and other IFIs often simplytake our place.”“Business processes have become more cumbersome,and task managers have less freedom thanin the past. This is partly linked to decentralizationand is complicated by safeguard issues. Greater bureaucracyhas slowed decision making and placedadditional burdens on task team leaders.”“The ‘one-size-fits-all’ approach with proceduresis wrong, but there are signs that this is changing.You cannot treat Zimbabwe and Poland the sameway.”“It took longer than expected to reverse the declinein transport infrastructure spending becauseuntil the Country Assistance Strategies were updated,infrastructure was not seen as a priority bysome staff.”“The Bank should be more prepared to enforceconditionality, especially where the filling of keyposts is concerned; this is the call of the countrydirector.”“We have a special responsibility in small countriesbecause our impact may be huge, whereas inlarge economies our impact is much smaller.”Eighty percent of Bank-funded transportprojects are road or road related. Do youagree with this modal split, or should webe doing more in the other transport subsectorsand in urban transport?Some respondents believed that what the Bankis doing reflects the needs of the borrowers andthat roads were the Bank’s strength. Other respondentsthought the Bank was overly biased towardroads and claimed it had gained a reputationas a “roads bank” and that certain borrowers wentto other IFIs for finance for other modes.“We should be doing more in the modes other thanroads, but have we really got a critical mass ofknowledge in these areas? It is interesting thatnow we have an aviation specialist; more aviationprojects are being generated. We need to ensurewe have a mix of people with the right experience.”“We should get involved less in intercity highwaysand more in integrated rural development.”“We are beginning to do more rail projects, buturban transport is neglected—this is unfortunate,156

APPENDIX E: BANK TRANSPORT STAFF INTERVIEW RESULTSconsidering the extent of urban growthanticipated.”Several interviewees believed the Bank should domore in urban transport (especially bus transport)but noted that the preparation of urbanprojects takes much longer and the transactioncosts are high. They are more complex, and thereare multiple stakeholders and safeguards issues,so they are riskier. Yet there is little incentive fortask managers to take on these difficult projects,so task team leaders will not always promote them.“We should not try to force our own agenda ontoborrowers. In Madagascar the Bank was keen toput the clean air issue on the transport agenda,but this was not a priority for the government.”Other interviewees claimed the Bank should bedoing more in waterways, ports, logistics, safety,and air pollution.Bank Performance (Efficacy, Efficiency,and Outcome)Reasons for Project Success• Innovative projects or aspects of projects• Commitment and ownership by the clients• Good supervision by experienced staff andcontinuity of team members• Large impact on peoples’ lives• Strong leadership by key implementation manageror key politician• Adaptability to changing conditions• Good funding streams for future sustainability.Reasons for Unsuccessful Projects• Lack of client commitment and ownership• Too many objectives and design too complexfor capacity of borrower• Corruption and vested interests• Political interference• Implementing agency too inexperienced andnot supported• Insufficient attention to sustainability issues• Opposition by affected communities.How well do we monitor and measure projectefficiency and outcomes? How couldwe do better?“Some indicators are too easy to achieve and arenot a stretch; others are impossible to measure soit doesn’t happen. Often there are too many indicators,and they can vary from project to project.”“We focus too much on the physical aspects ratherthan efficiency and outcomes.”“There is some evidence that economic analysisis manipulated if the economic rate of return isnot high enough.”“Indicators should be simple and measurable.”“We need to improve our monitoring capacity.”“Our rural indicators are improving, but we needmore work on urban indicators. Compliance is aproblem.”“We should take more cognizance of the lessonsof evaluation.”“It is important for the borrowers to have ownershipof the indicators; they often lack the capacityto monitor or consider that other prioritiesare more important.”“We should put more emphasis on freight tariffsas indicators.”“We need to do more impact assessments, butthey can be expensive.”“Project objectives should be carefully crafted.”“The discount rate we are using (12 percent) isoften too high. The Poverty Reduction and EconomicManagement Network sometimes uses 4percent. The European Bank for Reconstructionand Development uses 5 percent or 6 percent.”“There is insufficient understanding of economicanalysis by some transport staff, and results maysometimes be manipulated to ensure the resultis in the required range.”157

A DECADE OF ACTION IN TRANSPORT“Indicators for rural roads should include accessibilityand outcome (number of trips), supportedby cost-benefit analysis, the Highways Design andMaintenance Model, and feasibility studies. Localaccess roads are better approached through costeffectivenessanalysis and ranking.”“My perception is that we lack experience in someareas because a number of senior specialists haveretired.”“There is often a tendency to underestimate costsand overestimate benefits in the Project AppraisalDocument.”“Transport strategy should also be measurable,so that we can assess how well it is beingaccomplished.”“Performance-based budgeting by ministries of financecan put pressure on transport agencies toinvest in results measurement.”“In the East Asia and Pacific Region there is a‘gatekeeper’ who monitors indicators proposedin transport projects.”Support for WorkFrom where do you receive the most supportor advice when you require it, to enable youto perform your tasks effectively? Indicatethose most important to you.• Peers (95%)• Transport anchor (60%)• Information systems (50%)• Guidelines/manuals (20%)• Other: e-mail forums, support staff, Web site(5%)• SSATP (75%, Africa respondents only)• Brown bag lunches and other events (65%)• Management (35%)• Formal training (15%).Summary of CommentsOverwhelmingly, people find support from theircolleagues (peers). The anchor is considered important,and to a lesser extent management advice,training, brown bag lunches, guidelines, andsystems are seen as helpful. All respondents fromSub-Saharan Africa mentioned SSATP, but therewere two distinct groups—those who stronglysupported it and those who thought it was notworth the resources put into it. Other pointsraised were as follows:• Several people criticized the transport Website as being out of date (even though it wassteadily being upgraded during the interviewperiod).• Three respondents mentioned the poor qualityof support staff.• The Transport Forum and Transport LearningWeek were seen in a positive light, especiallyby staff in the field.• The e-mail forums whereby comments or advicewere sought are seen positively, and peopledo seem to make use of this facility.• Brown bag lunches are important to Washingtonstaff. The country office staffs prefer touse videoconferencing. It was also mentionedthat field staff could not file directly into IRIS[an internal Bank database], which led to abacklog building up of documents to be filed.• Many respondents referred to a lack of resourcesin the anchor, which led to fewer thinkpieces being produced. The lack of internationalexperts to lead thinking in the anchor,especially in roads and railways (after the departureof Ian Heggie, Lou Thompson, andKenneth Gwilliam), was mentioned by severalrespondents.Most respondents preferred to consult with peersbefore management for advice unless the querywas of a political or strategic nature. This waspartly due to perceptions that access to managementis not readily available; the exception wasLatin America and the Caribbean, where managementwas often the first choice.Coordination/Communication with OthersTo what extent is it easy to coordinate andshare good practice (scale of 1–5, where 5is very easy)?158

APPENDIX E: BANK TRANSPORT STAFF INTERVIEW RESULTSAverage scoreHeadquartersFieldBetween regions inthe transport sector 3.3 2.7With staff in countryoffices or HQ if youare in a country office 3.9 3.9With the anchor staff 3.3 2.8With staff in othernetworks 2.9 2.6With other parts of theWorld Bank Groupsuch as IFC and MIGA 2.6 2.2CommentsThe most positive aspect is the strong coordinationbetween headquarters and the field, withboth sides ranking this highest. For other areas ofcoordination/communication the perception inthe field offices is poorer because it is more difficultfor them.Communication/coordination with other networksor parts of the Bank Group may have beenscored low in some cases because there was littleneed for such activity on the part of some ofthe respondents.WorkloadHow much time have you spent away onmissions in the last 12 months? Do youthink your workload is about right, toolow, or too high?All interviewees averaged 4.0 months on mission;headquarters-based staff working in Regions averaged4.6 months; anchor staff averaged 3.6months; field staff, 3.7 months; and all staff basedin Washington, 4.2 months.Fifty percent of staff spends between 4 and 9months on mission, and there is a strong correlationbetween those spending more than 4months away from home and the perception thattheir workload is too high. In terms of workload,53 percent said too high, 40 percent said aboutright, and only 7 percent said too low. It was observedthat those who responded “too low” hadonly been with the Bank for a short time.ChangeIf you could change the way we do just onething in the Bank, what would it be andwhy? (Comments made by three or more respondentsare shown in bold.)• Greater commitment to change povertyis necessary, especially in Africa.• We need to work more efficiently andsmartly. We need smart support staff thatis knowledgeable about information technology,and proactive.• We need to disseminate more effectively;we are all too busy to share innovationsuccessfully.• We need less pressure on task team leadersto improve operational quality and disseminationeffectiveness and to ensure westay abreast of developments in our field.• The anchor needs more funding andresources.• We need less micromanagement, and taskteam managers need to be empoweredwith more responsibility for decisionmaking.• Decentralized staff, such as disbursementofficers in country offices, should havemore responsibility.• Perhaps we should work less with Trust Funds—they are too restrictive.• We need to make quicker decisions (noobjections).• More flexibility is required in the applicationof the safeguards policy.• We need more advice, orientation, and helpfor new staff.• We should take road safety more seriously.• More people with extensive operationalexperience are needed.• We need more effective donor harmonizationshould be sought.159

A DECADE OF ACTION IN TRANSPORT• Ways should be devised to reduce the hightransaction costs in project management suchas vertical integration. If we are to scale up, itis important to streamline procurement and gobeyond traditional contracting systems.• The Transport Sector Board should have morepower to intervene when things are goingwrong (others opposed this and thought itran counter to the decentralization initiative).• We should be doing more to help people helpthemselves.• We should not be funding recurrent expenditures.• We should cut down on support personnelwho do not add value.• Good technical managers are not necessarilygood administrative managers and may needfurther training.• Reinvigorate thematic groups.• There are too many reviews, checks, andbalances. In the end they become counterproductiveand can reduce productivity.• The budget for project supervision shouldbe linked to the complexity of the projectsinvolved.• It is questionable whether the matrix systemadds sufficient value.• Sufficient resources should be provided fortraining for country office staff.• More cross-regional support work should beencouraged.• There should be more movement of staffbetween the Regions.• Locally recruited staff should have the same opportunitiesas internationally recruited staff.• There should be more incentives for Head Officestaff to work in field offices.• We should undertake more urban transportprojects, but this requires greaterpreparation resources and perhaps morespecialized staff.• We should be less prescriptive and listen to ourclients.160

APPENDIX F:STAKEHOLDER INTERVIEWSInterviews with stakeholders conversant withBank-supported activities were carried out as partof this review, complementing the country casestudies of Brazil, India, and Tanzania. The structuredinterviews covered current and formergovernment officials and users and providers oftransport services, consultants, and academics.The main findings are reported below.BrazilAnalysis of the respondents’ answers suggeststhe following conclusions:• The Bank’s actions, in terms of supporting environmentalsustainability and providing safeguardsfor the people affected by new projects,had the highest number of very positiveanswers.• Answers with a large proportion of “omitted,undecided” were analyzed for the questionsabout incentives to private participation, knowledgedissemination, procurement/tenderingprocedures, and affordability/accessibility forthe poor.• Capacity building was one of the least criticizedconsequences of the Bank’s actions. Incontrast, the answers showing the highestdegree of dissatisfaction referred to the questionsabout knowledge dissemination, incentivesfor private participation, and procurement/tendering procedures, in descending order ofimportance.Generally, the respondents had a positive view ofBank actions in Brazil. Some areas of a more specificnature are:• The relevance and timeliness of Brazil’s transportsector projects• The anticipation of good results from privatization,especially in the railway sector• The Bank’s influence in project and institutionalintegration and coordination• The need to coordinate construction and maintenanceaspects of projects• The importance of technical advice and skillbuilding• The implications of subway/metro financingin less-than-optimal contexts (Recife, Belo Horizonte,Porto Alegre, and so forth)• The peculiarities of developing countries, visà-visthe context of the developed economies• The need to consider all aspects of sustainability,including economic, political, technological,social, and environmental• Inadequate coordination among projects/institutions over time• The fact that environmental concerns are anissue that is now being addressed in Brazil• The lengthy Bank approval process• The limited capacity of states and counties toassume debt• The oligopoly that has been created with respectto the Bank’s knowledge and loan approvalprocess• The need for greater publicity about the Bank’srole, norms, and requirements• The use of overly optimistic data on populationgrowth and transport demand• The importance of targeting assistance tomedium-size cities and less-costly projects• How IMF demands for public debt reductionaffect the financing of transport projects.161

A DECADE OF ACTION IN TRANSPORTIndiaThe main findings from the Indian stakeholderswere as follows:• The presence of the World Bank in the transportsector has had a significant impact. However, thishas remained largely confined to the area of roaddevelopment. The impact on the transport sectoras a whole has been less pronounced.• Bank project objectives have been fairly consistentwith the country’s development objectives.The absence of an effective mechanismat the national level for coordinating the sectorneeds and priorities has been a major handicapin taking a holistic approach for the balanceddevelopment of the transport sector.• Bank-assisted projects have focused primarilyon increasing the carrying capacity of roadsrather than on improving transport sector management.Yet important achievements includecreation of a valuable database for the road network;creation of Road Development Boards ina number of states; improved constructionmethods and maintenance practices; streamlinedprocurement and allied practices; emergenceof alternative funding strategies, includingpublic private participation; adoption of the InternationalFederation of Consulting Engineers’document and large contract packages. Thelatter have helped the local construction industrydevelop.• Weak links are urban transport and intermodalefficiency. These should be given more attention.Dissemination of Bank knowledge in thisarea is inadequate.• Bank processes are complex and result in longlead times.TanzaniaThe main findings were as follows:• Bank-funded projects have substantially helpedimprove port and road operations and management.Bank support of the railway was limitedto mitigating operational problems withoutproviding a sustainable solution so far.• Stakeholders from both the public and theprivate sectors appreciate the Bank’s supportfor a greater involvement of the private sectorin the provision of transport services. However,some stakeholders cautioned that privatizationshould be done carefully, as the country doesnot have an adequate social safety net.• The Bank has not been effective in disseminatingits know-how. Bank experts are veryknowledgeable but meet and share their experienceswith few people. Stakeholders do notsee regular publications and newsletters. TheInternet is not accessible by many.• There were conflicting views about the Bank’sprocurement system. Some stakeholders feltthat tendering procedures are cumbersome,not well understood, and time consuming.However, others commended the proceduresand felt that they help one get value formoney.162

APPENDIX G:BANK DOCUMENTS AND TRANSPORT SECTOR BOARD ACTIVITIESDistribution of Bank TransportDocuments by Mode, Theme, and RegionBy Transport ModeAmong the sample of Bank papers/reports, 26percent address sector-wide issues in transport,and 24 percent focus exclusively on roads, 14percent on urban transport, and 11 percent ontransport infrastructure in general.By ThemeNearly 25 percent of the sample related to broadpolicy/strategy; followed by finance, 15 percent; privatesector development/commercialization, 11percent; poverty, 9 percent; regulation, 9 percent;institutional development, 6 percent; and economicimpact, 6 percent.By RegionNearly 55 percent of the sample addresses issuescommon to all lending regions. Africa is addressedexclusively in 13 percent of the reports, followedby Europe and Central Asia in 10 percent, LatinAmerica and the Caribbean in 9 percent, East Asiaand Pacific in 8 percent, South Asia in 6 percent,Middle East and North Africa in 1 percent, and developedand other countries in 4 percent (tableG.1). Of the approximately 60 reports that relateto specific countries, the highest numbers arefor Brazil and India (six each), followed by China(four), Vietnam, Poland, and Argentina (threeeach), Mexico, Indonesia, and Ghana (two each),and one each for 20 other countries. Forty otherreports address more than one country.Table G.1: Distribution of Core Transport-Related Papers/Reports (Total~200)Transport mode/emphasis % Theme % Region %Sector-wide 26 Policy/Strategy 25 AFR 13Roads 24 Finance 15 EAP 8Railways 6 PSD 11 ECA 10Ports 5 Poverty 9 LAC 9Rural transport 8 Regulation 9 MNA 1Urban transport 14 Institutions 6 SAS 6Trade and transport facilitation 1⁄2 – 3 Economic impacts 6 All regions 55economywide issues, aviation, each Technical issues 5inland waterways Regional issues, transport servies, < 3environmental issues, others eachSource: World Bank data.Note: AFR = Sub-Saharan Africa; EAP = East Asia and Pacific; ECA = Europe and Central Asia; LAC = Latin America and the Caribbean; MNA = Middle East andNorth Africa; SAS = South Asia.163

A DECADE OF ACTION IN TRANSPORTTransport Sector Board ActivitiesTransport Sector BoardThis Board has an overall responsibility for transportin Bank operations. Its core responsibilitiesinclude the development of sector strategy and relatedoperational policies, including operationalprocedures and guidance to staff. It is also responsiblefor broad oversight of the quality ofoperational work, human resources, and partnerships,as well as learning and knowledge management.The Board sponsors or cosponsorsvarious events for the purpose of learning, exchanginginformation, and supporting strategyformulation. Typical events include the following:• Transport Forum. These Forums have beenregular annual events in Washington, DC, bringingtogether staff from all Regions. Selectedleading experts in the transport sector from outsidethe Bank participate, according to thechosen theme for the forum. Transport Forumshave received high ratings from participantsin terms of learning and professionaldevelopment. Transport 2005 was held March7–11, 2005, with the overall theme being “TheRole of the Private and Public Sectors in the Supplyof Transport Infrastructure and Services.”• Transport Learning Week. This is held annuallyoften following the annual Transport Forumand is an opportunity for staff in the transportnetwork to acquire new learning or to refreshtheir skills and remain at the cutting edge ofsector knowledge.• Annual “State of the Transport Sector” Meeting.These meetings provide an opportunity toshare information from the Regions, the anchor,and transport staff in other units on work plansat the beginning of the financial year. Staff havefound them useful for communication acrossRegions.• Brown bag lunch series on transport sector issues.These are informal meetings organizedby staff members to exchange ideas and sharelearning on transport topics of interest. At leasteight are held during the year; they are normallywell attended by transport staff.• Courses and workshops. A number of internaland external courses and workshops are heldthroughout the year, depending on identifiedneeds and demand. Typical courses are on theuse of economic evaluation models; povertyand transport; and project implementation,supervision, and monitoring.• Formal staff training. Although formal trainingis customized to the needs and aspirationsof individual staff members, some courses havebeen recommended as particularly useful learningopportunities, such as the Senior RoadExecutives Program at the University of Birminghamin the United Kingdom. Funding isalso set aside annually by the Board for suchformal training, which typically comprises acontribution toward fees or travel but doesnot cover time costs.• Thematic groups work program. Important recentoutputs have been updates of the port reformtoolkit, urban transport toolkit, and railprivatization database. There has also beenwork on poverty impact measurement anddistributional issues of transport interventions.Also, some tasks in the social responsibilityarea have been completed; this area was constrainedby a very small budget. Other outputsincluded inter alia a Technical Note onroad asset management, a Transport Note onPPP in highway development, and work in theaviation (strategic partnership with ICAO) androad safety fields. In the latter case, the workhas been partially funded through the GlobalRoad Safety Facility.164

ENDNOTESChapter 11. The estimate for the transport contribution ofglobal GDP includes transport services, infrastructure provision,and management. Indirect contributions throughenergy use and vehicle manufacturing are excluded.2. Information pertaining to IFC is taken from appendixD, which has been published separately (IEG2007).3. Numerous econometric studies have identifiedthe significance of efficient transport studies supportingeconomic growth. See, for example, Dunkerleyand Hine (2001), for a review of macroeconomic evidence.Also The World Development Report (WorldBank 1994b, p. 15) gives a perspective on economic returnsfrom infrastructure investment. More recentwork can be found in an article by Dollar and Kraay(2002).4. The concept of poverty is multidimensional. It isnot only related to a low level of per capita income, butalso to many other conditions, such as malnutrition, illhealth, illiteracy, and lack of access to basic services. Foran overview of various studies, see Liu (2005).5. As of the cut-off date, 23 projects were not yetevaluated.Chapter 21. Other relevant initiatives that have provided fundingfor transport projects include the Public PrivateInfrastructure Advisory Facility, the Global Partnershipfor Output Based Aid, the Cities Alliance, and the GlobalEnvironment Facility.2. From its inception, the Bank has provided supportto the transport sector. Before 1960 two-thirds ofBank lending for transport was concentrated on railwayand waterborne transport, mainly in loans to Japanand Europe for equipment replacement and reconstructionfollowing World War II. After that, the emphasisshifted to new infrastructure in developing countries,many of which had recently gained independence. In1972 the Bank reviewed its transport strategy andshortly afterward began to focus more on institutionalreform. The Bank played an important role in the concessioningof the railways in Argentina but was lesssuccessful with railways in Pakistan and ports in Brazil,where government commitment to reform was weaker.During this period, highway sector lending was increasingsteadily, so that by the late 1970s it accountedfor two-thirds of the Bank’s portfolio. However, by theearly 1980s, misgivings arose about the failure to adequatelymaintain many of these roads. In a 1988 policypaper, “Road Deterioration in Developing Countries:Causes and Remedies” (World Bank 1988), the Bank estimatedthat substantial road infrastructure had beenlost because of inadequate maintenance in 85 developingcountries. This led to greater focus on rehabilitationand maintenance as well as institutional reformby both the Bank and other concerned agencies. Anumber of fiscal crises had also reduced the resourcebase for transport sector funding, and this led to newfinancial instruments such as sector loans within multiyearpublic investment programs and, later, sector adjustmentloans directed to addressing sector policyand management issues. An IEG review of rural roadmaintenance (IEG 1992) recommended more use ofroad maintenance optimization models and bettermonitoring and evaluation of such projects. Urbantransport lending began in the mid-1970s with an emphasison traffic management and the development ofpublic transport. In some Latin American countriesradical measures to give buses priority over privatecars were successfully implemented, and this was documentedin the Bank’s “Urban Transport Sector PolicyPaper” (World Bank 1986).3. Public administration includes central governmentand general public administration, pensions andunemployment insurance, law and justice, compulsoryhealth finance, and subnational governmentadministration.165

A DECADE OF ACTION IN TRANSPORTChapter 31. The only high-income country is the Republic ofKorea, which was severely affected by the Asian financialcrisis. Some oil-producing states such as Kuwait andIran are more focused on accessing technical knowledgethan on investment funding.2. In the last 20 transport PPARs sustainability wasdowngraded from the ICR assessment in 20 percent ofcases and upgraded in 5 percent.3. Some comparative figures for road projects inother multilateral organizations are Inter-American DevelopmentBank, 82 percent; Nordic Development Fund,85 percent; and Asian Development Bank, 87 percent.4. The consequences of neglecting maintenanceare outlined in the World Bank Operational GuidanceNotes, TRN-4 June 2005. As an example, the SouthAfrican National Roads Agency Ltd. has estimated thatdeferring a repair for 3 years costs six times as muchto fix than if it were carried out immediately. If the repairsare deferred for 2 more years, repair of the roadwill be 18 times more expensive than it would have been5 years earlier, when the maintenance was actually required.Minor defects, such as a blocked drain, if notattended to can result in the complete failure of a roadsection.5. The expression of commitment was usually madethrough a Letter of Intent or Statement of Policy.6. Regional cooperation between these institutionsin the transport sector includes the Asian DevelopmentBank and the Japanese Bank for International Cooperationand Development in Asia; the Inter-AmericanDevelopment Bank in Latin America; the EuropeanBank for Reconstruction and Development; the EuropeanInvestment Bank (EIB) in Europe and CentralAsia; and the Islamic Development Bank, EIB, and theArab Fund in the Middle East and North Africa. In Sub-Saharan Africa a number of donors are involved bothon a project basis and through the SSATP Program, includingthe African Development Bank and a numberof bilateral agencies from Europe and elsewhere.7. Program-based approaches apply the same approachand philosophy as sector-wide approaches butare more flexible in application in that they can applyto any coherent program, beyond the conventionalnotion of a sector, and range in scope from the microto the supranational levels. In all cases high levels ofdonor and country coordination are necessary toachieve program goals.8. The review also considers selected presentationsby Bank and outside experts made in conferences, andTransport Forums conducted by the Bank’s TransportSector Board.9. The count of reports has been generated from theWorld Bank’s ImageBank—the Web-based electronicrepository of Bank documents using the search optionsof “transport” for sector, “1995–2005” for the time period,and “Publications and Research” and “EconomicReports” for document type. This count could be understatedif staff has not been diligent in filing documentsin the official system.10. The Quality Assurance Group (QAG) of theWorld Bank conducts annual assessments of economicand sector work covering sector reports and economicreports.11. Sector reports with primary focus on transportcovered by QAG’s Quality of ESW Assessments: RussianFederation: Transport Strategy Update (fiscal 1998);Chad: Transport Sector Strategy; Guinea: TransportPoland: Transport Strategy (fiscal 1999). No transportsector reports were included in the fiscal years 2000,2001, and 2002 assessments.12. The course on Privatization and Regulation ofTransport Infrastructure Services held in April 2001 resultedin a 44 percent increase in learning by the participantsbased on the level-two test administered tothem.13. Perhaps the most notable is the University ofBirmingham (United Kingdom) Senior ExecutiveProgram.14. Interviews with transport specialists revealedthat many are so busy that they often do not even havethe time to keep up with the latest knowledge in theirown fields of expertise. Some also made a plea forstronger ties with research institutions and more jointinitiatives with other sectors.Chapter 41. The four main variants of PPPs are joint ventures,leases (under which a private party operates equipmentor facilities leased from the public sector), and twotypes of long-term concession, normally referred to bythe acronym DBFO (design, build, finance, and operate)or BOT (build, operate, and transfer). The main differencebetween the two is that under the latter, theconcessionaire raises revenues directly from users of theservices, whereas under the former, remuneration166

ENDNOTEScomes from the government budget as users receive theservices. All four partnership variants involve private capitalfinancing, normally raised against the security of thecash flow to be generated by the services provided.They usually also involve at least some degree of governmentcapital contribution (for example, in the formof land or existing facilities made available to the privateoperator).2. The PPI database can be found at http://ppi.worldbank.org.3. Investments recorded in the PPI database representcommitments and are invariably overstated. Manyprojects lapse or investment commitments are subsequentlyrenegotiated downward. The total investmentrecorded also includes the sometimes significant portionof public sector investment committed by governmentor sourced from international financialinstitutions.4. Analysis of Chilean Central Bank data is reportedin Sharp (2005).5. Freeports or entrepôt centers are focused on intermediarytrade and transshipment. Goods in such centersare often duty free and reexported after value hasbeen added to the products locally.6. IFC finances only a portion, usually not more than25 percent of the cost of any greenfield project. MostIFC-financed projects require other financial partners.One way in which the IFC mobilizes private sector financeis through the sale of participations in its loans;this is known as the B-loan program. More than 190 commercialbanks and institutional investors currently participatein this program. Other sources are sponsorequity loans, investments by local banks, technical partners,and other local and international investors.Chapter 51. Sunk investments are costs that have already beenincurred and that cannot be recovered to any significantdegree.2. The budget approach is the most used worldwide,especially in Europe. Road expenditures, includingmaintenance, are considered public expenditures thatneed to be covered by the national budget, and in manycountries this extends to regional and local budgets aswell. Except when roads are congested, roads are apublic good to be financed out of general taxation. Fueltaxes, vehicle registration fees, and other levies aretaken as general taxes that finance the budget. Allocationof the budget to the road sector results from a politicalprocess that assigns priorities and permits flexibility.3. The road fund approach is used in the UnitedStates, Japan, New Zealand, and many developing countries,especially in Africa. Road users pay user charges,mainly in the form of a fuel levy. Revenues from thesecharges are, in principle, allocated to road expenditures,especially maintenance. The users-pay approach postulatesthat the allocation of resources will be more costeffective and road works will have lower unit coststhan under the budget approach.4. Early road funds in the late 1970s and early 1980swere of the first-generation type, merely a line in thenational budget labeled as a road fund.5. The IMF, while expressing reservations, agreed toreview the merits of road funds on a case-by-case basisand to strive for closer coordination in cases where disagreementsarose.6. The leaders of the African Development Bank,Asian Development Bank, Inter-American DevelopmentBank, EIB, European Bank for Reconstruction andDevelopment, the IMF, and the World Bank met on February18, 2006, to discuss a joint approach to the problemsof corruption. They agreed to standardize thedefinition of corruption, to improve consistency oftheir investigative rules and procedures, to strengtheninformation sharing, and to ensure that compliance andenforcement actions taken by one institution are supportedby all others.7. The lead for the audit came from an earlier investigationinto allegations of abuse of consultant trustfunds; three Bank staff were terminated and 11 companiesdebarred.Chapter 61. See http://1nweb18.worldbank.org/oed.2. See http://www.princeton.edu/~ina/images/infographics/transportation_big.jpg.3. However, as the IEG evaluation update of heavilyindebted poor countries points out, debt reductionalone is insufficient to ensure debt sustainability and improvednet transfers for poverty relief. Additional supportivemeasures by both governments and externalpartners are usually necessary.4. The Bank has used two criteria to define fragilestates: a per capita income falling within the thresholdof IDA eligibility, and performance of 3.0 or less on boththe overall Country Policy and Institutional Assessment167

A DECADE OF ACTION IN TRANSPORTrating and that rating for Public Sector Management andInstitutions.5. See http://www.transparency.org.6. The African Capacity Building Foundation is an independentinstitution in Harare, Zimbabwe, that providesgrants to national and regional institutions andprograms to help strengthen economic policy analysisand development. It was established in 1991 by theBank, together with the African Development Bank, andthe UN Development Programme.Chapter 71. Early projects from the first two QAG exercises wereexcluded because they contained no narrative commentaryexplaining the scores of the rankings assigned.2. There has been some attempt to look at the distributionaleffects of urban rail projects in Brazil (Rebelo2004), but further research is needed. The issueof the wider impacts and multiplier effects is morecomplicated than it appears at first. Within the Bank earlierwork attempting to estimate total national incomeincrements associated with rural road investments wasfound to be too difficult to apply as a formal appraisaltool, partly for data and forecasting reasons and partlybecause it concentrated on physical outputs ratherthan service accessibility. But there is also the more fundamentaltheoretical question of whether the extent towhich and the circumstances in which the measureduser benefit understate the true total benefit. The workof Burgess and Venables (2004) has taken the issue forwarda little in empirical terms. The multiplier effect isa quite different issue concerning macroeconomic consequencesand depends largely on the overall level ofemployment of resources in the economy.3. A few “outlier” ERRs were removed from thesample. For example, there were instances of smalljunction improvements that would have an extremelyhigh ERR but would distort the overall picture.4. Some countries now use 12 percent.5. On April 24, 2004, the Inspection Panel receiveda Request for Inspection related to the India-MumbaiUrban Transport Project. This request was submittedby the United Shop Owners Association on behalf of118 residents of Mumbai who claimed to be adverselyaffected by the project. This was accentuated by a furthersubmission on June 24 by three nongovernmentalorganizations on behalf of a further 350 residentsfrom a separate neighborhood. On June 29, 2006, IBRDand IDA restored India’s right to make withdrawalsfrom the loan and credit following compliance or significantprogress on the conditions under the suspensionof disbursements.Chapter 81. Another example is the Oslo toll cordon introducedin the early nineties, which has contributedto reducing traffic and financing new roads and“environmentally friendly” tunnels under the downtownarea as well as new public transport infrastructure.2. See http://www.ieta.org/ieta/www/pages/download. php?docID=174.Appendix A1. The World Bank Regions are Sub-Saharan Africa,East Asia and Pacific, Europe and Central Asia, LatinAmerica and the Caribbean, Middle East and NorthAfrica, and South Asia.Appendix B1. When parts of the former London Transport weresold and route franchises were competitively tendered,costs per bus-km were halved in real terms between1985 and 1997. Cox and Duthion (2001) record that annualtraffic reached an all-time peak of 1.3 billion passengerjourneys in 2000. This has been substantiallyboosted by the introduction of the central city accesscharge for cars in 2003.2. In 2005 the government, with the support of theBank, embarked on a major highway maintenance andrehabilitation program. The program has been assignedpilot project status under a special arrangement withthe IMF that allows expenditures allocated to highpriorityprojects to be excluded from the estimate ofthe government’s primary fiscal surplus, thus freeingthem from binding financial constraints.3. The experience of Brazil and other Latin Americancountries in privatizing public transport services hasshown that concessioning will not suffice. The countrieswith the greatest success in attracting private investmentduring 1996–2001 (Chile, Colombia, andBolivia) were precisely those in which overall public investmentin infrastructure as a percentage of GDP hasremained high.4. The participants in the Ghana road sector evaluationwere the Japan Bank for International Cooperation,Kreditanstalt für Wiederaufbau, the EU, the Dutchgovernment, Arab Bank for Economic Development inAfrica, Organization for Petrol Exporting Countries,168

ENDNOTESUSAID, African Development Bank, World Bank, andDanish International Development Assistance.Appendix C1. In 2005, approximately 4,200 transport or logisticsitems made up 13 percent of total on-line investmentinformation content.2. The share of MIGA guarantee gross exposure issuedper fiscal year for infrastructure projects overallincreased from an average of 17.6 percent (1995–99)to an average of 31.7 percent (2000–06).3. Overall, the infrastructure sector accounted for41 percent of MIGA’s outstanding portfolio.4. One project in the transport sector was cancelledby the clients because of a disagreement with MIGA.MIGA, the sponsors, and the senior lenders could notagree on technical legal issues surrounding the securitiespledge. MIGA terminated guarantees for anotherproject related to nonpayment of premium by theguarantee holders. This termination occurred within 6months from issuing the contracts of guarantee.5. Many of these issues are reflected in MIGA’sGuidelines on Assessing the Development Impact of OperationsSupported by MIGA Guarantees (2004), whichcontains a section on assessing operations where thepublic sector is the client.Appendix D1. When IFC syndicates a loan, IFC is the sole contractuallender, acting on behalf of both itself and socalledB-loan participants. Participation agreementsare signed between IFC and each participating financialinstitution in the B-loan. The participant’s relationshipwith the borrower is therefore indirect throughIFC, with IFC as the sole lender of record and administratorof the loan. The participants’ involvement,however, is known to the borrower and is included inany publicity for the transaction.2. Each year, IFC’s investment departments evaluatea random sample of investments that have reachedearly operating maturity and rate each operation on nineindicators. IEG independently reviews these reports andproject files and verifies each rating (or rerates it as appropriate)to ensure that evaluation standards are appliedconsistently throughout IFC. The results describedhere comprise 22 projects in the transport sector evaluatedfrom 1996 to 2004, which is a representativesample of approximately 50 percent of the 43 qualifyinginvestments approved by the Board between 1990and 1999 and subsequently disbursed. Qualifying investmentsare those made in new or follow-on projectsand exclude restructurings.3. Note that investment outcome is a measure ofgross profit contribution quality at the level of an individualinvestment, is sample-based, and thereforedoes not signify overall portfolio profitability. As iscommon for any investment portfolio, the overall profitabilityof IFC’s investments in transport is driven bylarge gains or losses on a small number of investments.4. The performance differences that are remarkedon in the text are statistically significant to at least the5 percent level, even based on the relatively small sampleof evaluated transport projects. Some cautionshould be exercised, however, in quoting success rates,given that a change in the rating of one project wouldaccount for an approximate 5 percent swing in theoverall success rate.5. Net profit contribution includes that from investmentscommitted before 1990 that were active atsome point in the period fiscal 1990–2005.Appendix E1. The transport “anchor” acts as secretariat to andsupports implementation of the work program of theTransport Sector Board. Its specialists also provide operationalsupport to transport staff.169

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IEG PUBLICATIONSStudy Series2004 Annual Review of Development Effectiveness: The Bank’s Contributions to Poverty ReductionAddressing the Challenges of Globalization: An Independent Evaluation of the World Bank’s Approach to Global ProgramsAgricultural Extension: The Kenya ExperienceAssisting Russia’s Transition: An Unprecedented ChallengeBangladesh: Progress Through PartnershipBrazil: Forging a Strategic Partnership for Results—An OED Evaluation of World Bank AssistanceBridging Troubled Waters: Assessing the World Bank Water Resources StrategyCapacity Building in Africa: An OED Evaluation of World Bank SupportThe CIGAR at 31: An Independent Meta-Evaluation of the Consultative Group on International Agricultural ResearchCountry Assistance Evaluation Retrospective: OED Self-EvaluationDebt Relief for the Poorest: An OED Review of the HIPC InitiativeDeveloping Towns and Cities: Lessons from Brazil and the PhilippinesThe Drive to Partnership: Aid Coordination and the World BankEconomies in Transition: An OED Evaluation of World Bank AssistanceThe Effectiveness of World Bank Support for Community-Based and –Driven Development: An OED EvaluationEvaluating a Decade of World Bank Gender Policy: 1990–99Evaluation of World Bank Assistance to Pacific Member Countries, 1992–2002Financial Sector Reform: A Review of World Bank AssistanceFinancing the Global Benefits of Forests: The Bank’s GEF Portfolio and the 1991 Forest Strategy and Its ImplementationFiscal Management in Adjustment LendingIDA’s Partnership for Poverty ReductionImproving the Lives of the Poor Through Investment in CitiesIndia: The Dairy RevolutionInformation Infrastructure: The World Bank Group’s ExperienceInvesting in Health: Development Effectiveness in the Health, Nutrition, and Population SectorJordan: Supporting Stable Development in a Challenging RegionLesotho: Development in a Challenging EnvironmentMainstreaming Gender in World Bank Lending: An UpdateMaintaining Momentum to 2015? An Impact Evaluation of Interventions to Improve Maternal and Child Health and Nutrition Outcomes in BangladeshThe Next Ascent: An Evaluation of the Aga Khan Rural Support Program, PakistanNongovernmental Organizations in World Bank–Supported Projects: A ReviewPoland Country Assistance Review: Partnership in a Transition EconomyPoverty Reduction in the 1990s: An Evaluation of Strategy and PerformanceThe Poverty Reduction Strategy Initiative: An Independent Evaluation of the World Bank’s Support Through 2003Power for Development: A Review of the World Bank Group’s Experience with Private Participation in the Electricity SectorPromoting Environmental Sustainability in DevelopmentPutting Social Development to Work for the Poor: An OED Review of World Bank ActivitiesReforming Agriculture: The World Bank Goes to MarketSharing Knowledge: Innovations and Remaining ChallengesSocial Funds: Assessing EffectivenessTunisia: Understanding Successful Socioeconomic DevelopmentUganda: Policy, Participation, PeopleThe World Bank’s Experience with Post-Conflict ReconstructionThe World Bank’s Forest Strategy: Striking the Right BalanceZambia Country Assistance Review: Turning an Economy AroundEvaluation Country Case SeriesBosnia and Herzegovina: Post-Conflict ReconstructionBrazil: Forests in the Balance: Challenges of Conservation with DevelopmentCameroon: Forest Sector Development in a Difficult Political EconomyChina: From Afforestation to Poverty Alleviation and Natural Forest ManagementCosta Rica: Forest Strategy and the Evolution of Land UseEl Salvador: Post-Conflict ReconstructionIndia: Alleviating Poverty through Forest DevelopmentIndonesia: The Challenges of World Bank Involvement in ForestsThe Poverty Reduction Strategy Initiative: Findings from 10 Country Case Studies of World Bank and IMF SupportUganda: Post-Conflict ReconstructionProceedingsGlobal Public Policies and Programs: Implications for Financing and EvaluationLessons of Fiscal AdjustmentLesson from Urban TransportEvaluating the Gender Impact of World Bank AssistanceEvaluation and Development: The Institutional Dimension (Transaction Publishers)Evaluation and Poverty ReductionMonitoring & Evaluation Capacity Development in AfricaPublic Sector Performance—The Critical Role of EvaluationAll IEG evaluations are available, in whole or in part, in languages other than English. For our multilingual selection, please visithttp://www.worldbank.org/ieg

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