Chapter 2. Strategies and activities of development partners for transport connectivity

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.

    

Strategies for transport connectivity

Individual strategies

As part of their transport strategies, Development Assistance Committee (DAC) members and multilateral development banks (MDBs) emphasise the importance of promoting connectivity in developing countries in order to increase jobs, reduce poverty, stimulate economic growth, foster regional economic co-operation and facilitate their integration in global trade. For instance, the strategy on transportation in the white papers on Development Co-operation by Japan’s Ministry of Foreign Affairs (MOFA, 2015) and Korea’s Economic Development Co-operation Fund (EDCF)—managed by the Export-Import Bank of Korea (KEXIM)—both highlight the instrumental role of transport connectivity in boosting economic growth and eradicating poverty. Similarly, France considers transport connectivity infrastructure a pillar of economic development and regional integration (AFD, 2009).

Likewise, the Asian Development Bank (AsDB)’s Regional Co-operation and Integration Strategy aims to increase trade and investment by enhancing regional connectivity, while its Sustainable Transport Initiative emphasises the importance of investing in cross-border transport (AsDB, 2017). In addition, some development partners such as the German Development Bank (KfW) consider effective transport connectivity as a pre-condition to the movement of people and exchange of knowledge, which are cornerstones for innovation and progress (KfW, 2017).

Bilateral and multilateral development partners also uphold social, safety, and environmental standards when supporting transport connectivity projects. Specifically, development partners try to ensure that transport infrastructure and services - including for connectivity - are distributed equitably and operate at minimum costs for society with limited energy usage. They also aim to minimise the risk of unsafe mobility and adhering to various international standards in transport connectivity projects (SuM4All, 2017). For instance, Australia and New Zealand’s co-operation focuses on harmonising and strengthening safety and security standards in maritime and airport transport infrastructure and services (DFAT, 2014; MFAT, 2016).

Furthermore, since the transport sector currently causes 23% of global energy-related greenhouse gas emissions, development partners are also mindful of climate mitigation and adaptation targets (SuM4All, 2017). In this context, many engage in helping recipient countries transit to a sustainable economy through greener transport connectivity. For instance, 7 out of the 16 development partners reviewed in this study (see Chapter 5) emphasise support to improve the environmental sustainability of transport networks, particularly by mitigating the impact of climate change.

In particular, German Corporation for International Cooperation GmbH (GIZ) and the Federal Ministry for Economic Co-operation and Development (BMZ) launched the Cities, Environment and Transport Programme in the region of the Association of Southeast Asian Nations (ASEAN), which targets climate mitigation in the context of increased mobility in member countries by enhancing energy efficiency of land transport. Within this programme, transport connectivity projects focus on fostering knowledge-sharing and greater co-ordination in offsetting fuel consumption and emission standards, Nationally Appropriate Mitigation Action (NAMA) in transport, and green freight transport (GIZ, n.d.). In addition, KfW prioritises the promotion of environmental and climate protection that cuts across all areas including transport by ensuring that their projects do not negatively impact the environmental and society (KfW, 2015). Similarly, France emphasises environmental sustainability in all of its connectivity projects, in addition to affordability (AFD, 2009). In general, these approaches could help developing countries achieve their Intended Nationally Determined Contributions for greenhouse gas emission reduction of the Paris Agreement.

In terms of geography, most development partners focus on specific regions or countries for transport connectivity in accordance with their overall priorities for development co-operation. Particularly, many of them support connectivity programmes and projects in the Mekong and ASEAN regions, possibly due to the current dynamism and the need for improved transport infrastructure vis-à-vis the regions’ economic potential. In addition to the Southeast Asia region, Australia and New Zealand also target their neighbourhood countries in the Pacific (Box 2.1). Others focus on countries with certain conditions: for instance, the European Union (EU) and the African Development Bank (AfDB) give particular attention to landlocked developing countries, while the United States focuses significantly on conflict and disaster-affected countries. In addition, historical and political ties, such as colonial past and political alliances play a major role in determining the geographic priorities of transport connectivity projects (Alesina and Dollar, 2000). For instance, France focuses particularly on enhancing connectivity through airport and port projects mostly in its former African colonies (AFD, 2015).

Box 2.1. Australia and New Zealand’s focus on Pacific island countries and Southeast Asia for transport connectivity

The Australian Department of Foreign Affairs & Trade (DFAT) and the New Zealand Ministry of Foreign Affairs & Trade (MFAT) see that scarce resources in the Pacific Island Countries (PICs) and their isolation from major markets pose challenges to their economic and human development. Therefore, they both emphasise the importance of enhancing transport connectivity networks in the Pacific region to help these islands link with international markets as well as improve their productivity and competitiveness. DFAT and MFAT therefore fund hard and soft transport connectivity projects mostly in the maritime and aviation sectors.

By the same token, Australia and New Zealand also focus on Southeast Asian countries, such as Indonesia and Vietnam, due to the region’s deficiencies in trade-enabling environment and transport connectivity. Akin to their efforts in PICs, they support mainly air and maritime projects in this region in order to increase trade, deepen the level of regional economic integration, and promote stability and security.

Source: DFAT (2014), Australian aid: promoting prosperity, reducing poverty, enhancing stability, Commonwealth of Australia, Department of Foreign Affairs and Trade, http://dfat.gov.au/about-us/publications/Documents/australian-aid-development-policy.pdf; DFAT (2015), Strategy for Australia’s Aid Investments in Economic Infrastructure, Commonwealth of Australia, Department of Foreign Affairs and Trade, https://dfat.gov.au/about-us/publications/Documents/economic-infrastructure-development-strategy.pdf; MFAT (2016), Development that Delivers: Results Achieved, New Zealand Ministry of Foreign Affairs and Trade, https://www.mfat.govt.nz/assets/Aid-Prog-docs/Annual-reports/Aid-Programme-2012-15-Triennium-Report.pdf.

Overall, in line with the aid effectiveness principles, the support by development partners in this area appears to be generally aligned to regional, sub-regional, or national plans for transport connectivity established by supranational institutions. For example, many development partners are helping countries establish One Stop Border Post (OSBP) under PIDA, notably Japan (see Japan’s profile in Chapter 5). United Kingdom also supported the Beit Bridge Border Post which was prioritised by the Government of South Africa as part of the North-South Corridor. Likewise, Australia, France, Japan, and AsDB, are supporting various transport connectivity projects aimed at enhancing regional integration among countries of the Mekong region under the Greater Mekong Sub-Region programme. In addition, Germany, Japan, United States, and AsDB are trying to close major missing links in Southeast Asia under the ASEAN Master Plan on Connectivity.

In order to better align with these frameworks and plans, development partners tend to co-operate and harmonise among each other using various arrangements in order to ensure the smooth preparation and implementation of transport connectivity projects. For instance, the Six Banks Initiative in Viet Nam - comprising the AsDB, the French Development Agency (AFD), KfW, the Japan International Cooperation Agency (JICA), KEXIM and the World Bank Group (WBG) - serves as a platform for development partners to jointly support projects of the Mekong Delta region according to Vietnam’s transportation development plan. Furthermore, MDBs often lead the co-ordination in projects supported by multiple development partners. For example, AsDB standards in project design, impact evaluation, environmental and social safeguards, as well as several implementation guidelines, have been adopted by others that are active in the Indochina peninsular.

Collective mechanisms for transport connectivity

To facilitate better co-ordination and harmonisation among themselves, development partners have established numerous funds and facilities to co-finance transport connectivity projects. For instance, Australia, the European Commission, JICA, New Zealand, AsDB, the European Investment Bank, and WBG, all contributed to the Pacific Region Infrastructure Facility (PRIF), which supports infrastructure development and maintenance in PICs, including for transport connectivity. The PRIF notably co-financed the rehabilitation of several roads and bridges in Vanuatu, Samoa, and Solomon Islands, following the 2009 earthquake and tsunami.

In addition, Belgium, Canada, Denmark, Finland, Netherlands, United Kingdom, and United States jointly finance TradeMark East Africa (TMEA) to support regional and international trade in East Africa by, inter alia, expanding port capacity, helping countries remove cabotage restrictions and improve co-ordination of logistics stakeholders (TMEA, 2018). Likewise, the Asia Pacific Project Preparation Facility established by AsDB aims to support project preparation, monitoring, and restructuring, as well as capacity building and policy reforms linked to projects that include transport connectivity. By pooling funds, this facility ensured that support by development partners for long-term transport infrastructure was coherent and co-ordinated (PRIF, 2017).

There are also global initiatives and organisations supporting transport connectivity, some of which address the needs of developing countries. For example, the International Transport Forum (ITF) carries out research on all transport modes through case studies and policy reviews as well as generates transport performance indicators that could be useful for developing countries. In addition, ITF’s Annual Summit, which gathers transport ministers from around 60 countries from all regions, also enhances communication and knowledge sharing on transport policies (OECD/ITF, 2017).

Likewise, the World Bank and other MDBs, United Nation (UN) agencies, bilateral development partners, non-governmental organisations (NGOs) and academic institutions have developed a specific strategy for transport called Sustainable Mobility for All (SuM4All) to promote equitable, efficient, safe and green mobility around the world. SuM4All aims at, for example, increasing access to jobs and services as well as reducing cost and time of transport. Specifically, this is carried out by helping improve the soft aspects such as coherence in international and local transport policy and leverage the necessary financing to implement sustainable mobility policies (WBG, 2017a).

Moreover, there are several organisations supporting transport connectivity, which focus on a particular transport mode. In air transport, the International Civil Aviation Organisation (ICAO) has launched a No Country Left Behind initiative to assist states -especially landlocked developing countries and small island developing states - in implementing ICAO Standards and Recommend Practices. This initiative provides capacity building to government agencies and air operators on safety and security oversight systems, optimisation of airport usage and air space, and so on (ICAO, n.d.).

With respect to road, the Permanent International Association of Road Congresses (PIARC, or World Road Association) organises international forums and various seminars on the full spectrum of road transport issues, with a particular focus on the needs of developing and transition countries. In particular, topics include co-ordination between national and sub-national authorities on road management and finance, rules for pavement design, as well as geometric and structural standards for the African Highway Network (PIARC, n.d.).

As for railways, 50 countries co-operate under a framework of the Intergovernmental Organisation for International Carriage by Rail (OTIF), with the objective of unifying railway laws to connect Europe, Asia and Africa, as well as to eliminate border-crossing barriers in international rail traffic. Within the framework, OTIF standardises the contracts of carriages and the rules for transporting dangerous goods such as explosive substances, gases, and flammable liquids. It also provides inter-operability standards and technical assistance to its member states (OTIF, 2018). Similarly, the International Union of Railways also serves as a standard-setting organisation in railway sector. It has established the classification of locomotives and their axle arrangements, coaches, and goods wagons, as well as standardised international railway terminologies in English, French and German. In addition, it holds regular conferences on improving rail operation technologies, such as paperless documentation of freight, railway signalling, and greenhouse gas emission management (UIC, 2014).

With regards to maritime transport, the International Maritime Organisation (IMO) develops and adopts international regulations and treaties, particularly for maritime safety and security as well as the prevention of marine pollution. IMO also reviews and updates international codes on dangerous goods, cargoes and containers in maritime shipment, ensuring the alignment with other regulations in the maritime industry. For example, IMO developed the International Convention for the Control and Management of Ships’ Ballast Water and Sediments which entered into force in September 2017, to require ships in international trade to manage and control their ballast water and sediments so as to avoid the introduction of alien species into coastal areas (IMO, 2004; 2017). In addition, the International Association of Ports and Harbours aims to strengthen co-operation and knowledge sharing among the world’s ports. By leveraging member expertise and facilitating dialogue, the Association helps resolve complex issues and concerns in ports and the maritime industry.

At a higher inter-governmental level, the G20, for instance, has been encouraging multilateral development banks and other development partners to increase investment in infrastructure and connectivity. In this context, the Global Infrastructure Hub (GIH) was established in Sydney in 2014 under the Australian presidency. The rationale to build this global information platform was to increase the flow and quality of infrastructure investment by helping match investors and projects. In addition, the Global Infrastructure Connectivity Alliance (GICA) launched in 2016 under the Chinese presidency promotes co-operation, knowledge exchange and dissemination of global inter-connectivity among MDBs, GIH, OECD, UN agencies and others. The aim of GICA is to develop solutions to optimise financing for global infrastructure connectivity. This involves, inter alia, facilitating interaction among experts, identifying relevant trends that impact connectivity, and providing relevant performance measurement tools (GIH, 2016; WBG, 2017b).

In addition, the G20 launched the “Compact with Africa” initiative under the German presidency in 2017, with an objective of enhancing infrastructure and boosting private investment in African countries. Under this initiative, African countries will first provide a report listing out their actions and targets for reforms in their macroeconomic, business and financing environment. The initiative will then engage development partners and international organisations, including the International Monetary Fund (IMF) and OECD, to provide technical assistance and policy recommendations pertinent to each item in the countries’ lists, in order to help them tackle the impediments in attracting private investment for infrastructure projects, including transport connectivity (Compact with Africa, 2017).

Furthermore, the G7 adopted the Ise-Shima Principles on Quality Infrastructure under the Japanese presidency in 2016. These principles emphasise the need to develop sustainable infrastructure with low life-cycle costs by, inter alia, ensuring job creation, capacity building, transfer of expertise, and resilience to natural disasters. They also underline the importance of addressing social and environmental impact and aligning with economic and development strategies in infrastructure investment (Box 2.2). While the principles cover infrastructure in general, it is of particular relevance to transport connectivity projects in developing countries. Apart from the G7, the UN 2030 Agenda for SDGs and the G20 Leaders’ Summit in Hangzhou also highlighted the importance of quality infrastructure. Furthermore, the OECD Ministerial Council Meeting in 2017 encouraged the organisation to elaborate guidelines and good practises in this area.

Box 2.2. Quality infrastructure

At the 2016 G7 Ise-Shima Summit hosted by Japan, leaders encouraged governments, development banks, international organisations, and the private sector, to follow the Ise-Shima Principles for Promoting Quality Infrastructure Investments, which uphold sound safety and quality standards, resilience against natural disasters, and job creation, while addressing social and environmental impact. The rationale is that, while quality infrastructure can be expensive in the short term, it incurs lower life-cycle costs than low quality infrastructure, which often impose long-term costs. The principles of quality infrastructure investment are:

  • Ensuring effective governance, reliable operation and economic efficiency in view of life-cycle cost as well as safety and resilience against natural disaster, terrorism and cyber-attack risks.

  • Ensuring job creation, capacity building and transfer of expertise and know-how for local communities.

  • Addressing social and environmental impacts.

  • Ensuring alignment with economic and development strategies including aspect of climate change and environment at the national and regional levels.

  • Enhancing effective resource mobilisation including through public-private partnership (PPP).

Furthermore, Japan announced the “Expanded Partnership for Quality Infrastructure” in 2016 to bring together JICA, Japan Bank for International Cooperation, Japan Overseas Infrastructure Investment Corporation, MDBs and other stakeholders to provide approximately USD 200 billion in the next five years to finance infrastructure projects in the world.

Source: JICA (n.d.a), Transportation - JICA Activities, https://www.jica.go.jp/english/our_work/thematic_issues/transportation/activity.html; MOFA (2016), White Paper on Development Cooperation 2016 - Japan's International Cooperation, http://www.mofa.go.jp/policy/oda/page22e_000815.html.

Apart from the organisations and initiatives mentioned above, forums and conferences have been organised to facilitate discussions on development co-operation issues relevant to transport connectivity, such as the African Union – European Union Summit, the Tokyo International Conference on African Development, and the Forum on China-Africa Co-operation. These events engage high-level officials and private sector representatives to share their knowledge, experiences and opinions on topics such as mobility, quality infrastructure, economic diversification and industrialisation in Africa (China-Africa Cooperation, 2017; UNOSAA, 2017; African Union - European Union Summit, 2017; Africa-EU Partnership, 2017).

In sum, these collective mechanisms, such as the G20, GICA, ITF and other international organisations for specific transport mode, can be opportunities and platforms for development partners to further enhance co-ordination amongst each other, including bilateral development partners beyond the DAC and new multilateral development banks such as the Asian Infrastructure Investment Bank (AIIB). Through these mechanisms, they could also better co-ordinate at the partner country level, in order to address various issues around transport connectivity mentioned in Chapter 1.

Activities in transport connectivity

Based on strategies and collective mechanisms described above, development partners support both hard and soft transport connectivity projects. Hard projects generally involve building or rehabilitating physical infrastructure of international ports and airports as well as roads and railways that are cross-border or connect national networks. This often involves modernising railways between important regions, constructing new roads and bridges as part of economic corridors—especially in Africa and the Mekong Region—and expanding the capacity of ports and airports to handle increasing freight and passenger flows.

Aside from hard projects, many development partners support soft projects, which address regulatory mechanisms, institutional frameworks, and policies that facilitate the efficient operation and functioning of the hard components. These projects can significantly contribute to enhancing connectivity at a relatively low cost compared to hard projects—roughly 13% of the amount of Official Development Finance and 33% of the number of projects for transport connectivity was allocated to soft infrastructure in 2014-20151. In general, soft projects often involve technical assistance and training by conducting regional workshops, sending experts, and providing hardware such as computers. In this context, the EU particularly emphasises the need for institutional capacity building for connectivity projects (European Commission, 2017).

Specifically, development partners help formulate transport connectivity master plans, such as Japan’s support in Africa (see Japan’s profile in Chapter 5). This includes financing feasibility studies and helping draft transport-related legislation and project documents. Other soft projects include improving transport procedures and regulations, notably by adapting safety and management rules to international standards.

Similarly, development partners support the management of cross-border transport infrastructure such as customs clearance and the capacity building of relevant transport authorities. In this respect, EU, Japan, and United Kingdom recently supported the establishment of OSBP to improve cross-border procedures. For example, the support in Malaba, located between Kenya and Uganda, which consolidated customs clearance between the two countries, have been estimated to help reduce the clearing time from 24 hours to four hours and adding an additional USD 70 million per year to the regional economy (JICA, n.d.b).

Development partners also help fill the data and knowledge gap in transport in order to improve the investment climate. For example, Korea and AsDB provided capacity building for the Better Transport Data for Sustainable Transport Policies and Investment Planning project in 2015 for Indonesia, Mongolia and Sri Lanka based on Korea’s knowledge and experience. By strengthening data collection and analysis in transport, it is expected to help establish sustainable transportation policies and investment plans in these three countries (Korea Knowledge Sharing Programe, 2015). Furthermore, MDBs and governments are using Source - a digital platform - designed to help public sector agencies prepare, manage, and publish their infrastructure projects to attract private sector investment, including transport connectivity. This cloud-based system presents standardised project information in a transparent manner. By providing better sectoral data and project information, these types of support could potentially help governments improve transport management and policies as well as facilitate in creating pipelines of bankable projects that could mobilise private investment for transport connectivity infrastructure.

Moreover, development partners also help crowd in private investment and improve efficiency in transport connectivity projects by promoting PPPs where natural state monopolies tend to prevail in transport infrastructure (ITF, 2017). In this context, they provide capacity building for PPP project implementation, such as on procurement and bidding processes, dispute resolution mechanisms, and by establishing independent PPP units. For example, the AsDB enhanced the capacity of PPP units in ministries in India and supported the passage of the PPP law in Bangladesh. These activities are particularly important when governments adopt PPPs for transport connectivity projects, which often entail high volumes of investment and complex contract arrangements.

Finally, there have been significant efforts to standardise PPPs by international organisations and governments. For instance, the WBG and the OECD have developed a checklist for PPPs covering different project phases, from concept to completion of contract term (WBG/OECD, 2015). Another example is the establishment of the PPP Centre in the Philippines as a co-ordinating and monitoring agency for all PPP projects in this country. This Centre also facilitates the implementation of the country’s PPP projects by providing technical assistance to government agencies and private sector entities. Furthermore, it advocates policy reforms to improve the PPP regulatory framework (Philippines PPP Center, 2017).

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Note

← 1. Only projects over USD 10 000 are included in the calculation. If all official development finance projects are included, soft projects will be three times more than hard projects in total.