Development partners carry out development co-operation so that developing countries can eventually drive them out of business. In other words, the objective of development co-operation is to help these countries achieve sustainable development that will no longer require aid. For this to happen though, developing countries need a thriving private sector that invests, trades, creates jobs, produces outputs, generates income, pays taxes, reduces poverty, and enhances the well-being of their citizens.

Transport infrastructure that connects developing countries is crucial for reducing trade costs, boosting economic growth, promoting regional integration, and achieving the Sustainable Development Goals (SDGs). Therefore, this report focuses on “transport connectivity” which includes international airports and ports, as well as railways and roads that are cross-border, part of corridors and networks, or link major cities within a country.

Improving transport connectivity in developing countries is crucial to reduce trade costs, boost economic growth, and promote regional integration. Therefore, to address various deficiencies in transport connectivity, numerous regional or sub-regional plans have been established. These are supported and financed by many development partners, particularly to fill the large financing gap. At the same time, due to the wide geographical coverage, there are specific issues in transport connectivity that need to be addressed, such as environmental and social concerns, co‑ordination and harmonisation, debt sustainability, trade and investment policies, and technological innovation. Development partners - including those beyond the Development Assistance Committee - could further enhance co-ordination at the partner country level as well as through collective mechanisms. They could also address ways to help improve the enabling environment in order mobilise private investment for transport connectivity, particularly for the poorer countries.

There are various challenges and deficiencies related to transport connectivity in each developing country region, such as: missing highway links in Africa; under-developed inland waterways and poor maintenance of ports in Latin America; inadequate quality and capacity of road and ports in Asia; and low transport safety standards in Europe. In this context, there are numerous ongoing action plans and initiatives at the regional and sub-regional level to address these issues. A table that summarises the current state of transport connectivity by subsector and action plans per region can be found at the end of this chapter.

In order to help developing countries improve transport connectivity and meet the SDGs, development partners have established strategies and programmes that provide frameworks for their projects. The following summarises the main features of some major partners. In general, by enhancing transport connectivity in developing countries, development partners aim at increasing jobs, reducing poverty, stimulating economic growth, fostering regional co-operation, and facilitating countries integration in global value chains. Moreover, they support regional or sub-regional transport connectivity plans based on their respective geographical focus or specific considerations. In addition, there are global and regional initiatives, including pooled funding facilities, which allow development partners to ensure coherence and co-ordination among themselves and with partner countries in carrying out projects. Besides financing hard transport infrastructure, development partners spend about 13% of official development finance on soft aspects to help develop relevant master plans, legislation, and policies; improve customs clearance at borders, facilitate knowledge sharing and project information to mobilise private investment; and promote public‑private partnerships.

This chapter describes the general picture and distribution of financing for transport connectivity. It covers modes of transport, development partners, regions, income level groups, and recipient countries, by comparing official development finance and private investment. Specifically, while developing countries finance the majority of their transport connectivity, the private sector committed on average USD 52 billion per annum in 2014-2015. In comparison, development partners reporting to the Development Assistance Committee committed USD 15 billion. In general, development partners and the private sector appear to have different focus - the former are mainly Asia and Africa or low-income countries and lower middle-income countries while the latter are Latin America and Europe or upper middle-income countries. However, the amounts of private investment mobilised by development finance institutions and international finance institutions are relatively small and usually in countries that tend to have high private investment in transport connectivity, which raises the question of development additionality. As such, development partners could explore effective ways to help improve the enabling environment to attract private investment to fill the large financing gap for transport connectivity, particularly in low-income countries and lower middle‑income countries.

The chapter presents profiles of 16 development partners that are active in supporting transport connectivity. This includes several members of the Development Assistance Committee - Australia, European Union, France, Germany, Japan, Korea, New Zealand, and the United States - as well as bilateral partners beyond the Committee, such as Brazil and China. It also includes multilateral development banks such as the African Development Bank, the Asian Infrastructure Investment Bank the Asian Development Bank, the European Bank for Reconstruction and Development, the Inter-American Development Bank, and the World Bank Group. Each section presents the strategies, programmes, and sample projects of the respective partner.

The official development finance (ODF) data in this report include concessional official development assistance (ODA) and non-concessional developmental other official flows (OOF). It excludes non-developmental OOF, such as officially supported export credits, This applied exclusively to a large volume of OOF loans from the Export-Import Bank of Korea that was not developmental. whose main objective is commercial and not developmental. The ODF data was extracted from the Creditor Reporting System (CRS) Aid Activities database (hereinafter “CRS” database), which includes project level information reported to the Development Assistance Committee (DAC) Secretariat by more than 60 bilateral and multilateral development partners. The eligible ODA recipient countries can be consulted in the DAC List of ODA Recipients http://www.oecd.org/dac/stats/documentupload/DAC_List_ODA _Recipients2014to2017_flows_En.pdf.