22/2/2002
Aid Must Double to Pay For Essential Infrastructure, Says World Bank

The World Bank this week announced that official development assistance needed to double to bring infrastructure and basic services in developing countries up to an acceptable standard consistent with meeting the Millennium goals. The announcement was geared to next month's meeting of the international community in Monterrey, Mexico to discuss how to finance global development. The World Bank says that more funds must to be allocated to provide infrastructure for the poor and meet basic development goals.

Speaking at the press conference entitled 'Making Infrastructure Work for the Poor,' Nemat Shafik, World Bank Vice President for Private Sector Development and Infrastructure, said infrastructure investments underpinned virtually all of the Millennium Development Goals agreed by world leaders at the Millennium Summit. The World Bank estimated that a doubling in official development assistance, combined with increased private sector development, was required to finance these infrastructure needs.

She said it was often forgotten that many people around the world lived without basic services, such as roads, electricity, water and telephones, all of which are the building blocks of development.

"The needs are vast, Ms Shafik, told her audience. When asked what they wanted, poor people put key services like roads, water, sewage, electricity and health care at the top of their list, he said, citing a World Bank study which brought together voices of 60,000 poor people from around the world.

Some 1.2 billion people currently lack access to drinkable water, while 2.4 billion lack access to adequate sanitation, say the World Bank. An estimated 2.5 billion lack access to modern energy supplies, often meaning no light for studying or learning and only dirty fuel to burn for heating and cooking (leading to respiratory illness). And, for the 900 million rural dwellers in developing countries who live without reliable roads, access to markets, jobs and clinics is limited.

Regionally, the data are even more sobering, say the Bank. In Sub-saharan Africa, less than 8 percent of the population is connected to the power grid system. "That means 92 percent of Africa is in darkness." In Africa alone, the Bank estimates that the investment requirements in infrastructure are over $18 billion per year.

In Latin America, 125 million people still lacked access to safe water, 200 million lived without adequate sanitation, and about 70 million still lacked access to modern energy supplies.

Shafik said that the World Bank was well equipped to deliver infrastructure services. She explained that the Bank's approach to infrastructure provision had evolved from a focus on large public utilities to an emphasis on innovative solutions involving non-state actors.

"How we do it has changed remarkably over recent decades. It's more about the private sector. It's more about targeting services to the poor. It's more emphasis on building good regulatory capacity and investment climates. But we know how to do it."

Shafik also referred to a crisis of financing for infrastructure, saying that finance had collapsed by half since the mid nineties. "The public sector has withdrawn from financing infrastructure, thinking the private sector could carry the burden. And after 1997, the private sector has also collapsed. And so the needs remain incredibly huge, and yet at the same time what we're saying is, it's not just an issue of volume of investments. We're also saying we know how to do this differently now. We know how to structure private-public partnerships. We know how to try and encourage the private sector to get in. And we know how to target in a much smarter way than we did in the past."

"The public sector clearly can't do it alone given the vast needs that I've just outlined. And the private sector has made progress. During the 1990s, there were over 2,300 private infrastructure projects which were implemented in the developing world, and the total investment of that amounted to about $690 billion."

The lack of infrastructure hurts the rural poor as well as the urban poor, says the Bank. Currently no one was worse served than the rural poor. The absence of basic infrastructure services limited their access to markets and effectively excluded them and their children from education, health, and other services.

However, while today the majority of poor people lived in rural areas, that picture would change in the next 25 years. Two billion more people would be born in developing countries. Most would live in urban areas, which would double in size and result in overcrowded slums without adequate services. Upgrading slums, providing affordable clean water and roads to connect the poorest urban areas, and engaging the urban poor as partners in the process were indispensable in tackling poverty, the Bank pointed out.