Chapter 4. Development partner profiles1

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.

    

Members of the OECD Development Assistance Committee

Australia

Strategies

Australian aid: Foster connectivity and facilitate trade

Australian aid aims to complement diplomatic and security efforts and protect Australia’s national interests by promoting stability as well as facilitating sustainable economic growth and poverty reduction mainly in its immediate neighbours of the Indo-Pacific region. In this context, it supports several transport infrastructure projects to facilitate cross-border trade and foster connectivity (DFAT, 2014a).

Strategy for Australia's Investments in Economic Infrastructure

The aim of Australia’s Strategy for Investments in Economic Infrastructure is to address infrastructure gaps in developing countries to create an environment that is conducive to sustainable economic growth, trade, and investment. A key priority within this strategy is to enhance connectivity and facilitate the movement of people, goods, services, and knowledge across borders. This is achieved by helping partner countries develop safe, sustainable, and reliable road and rail infrastructure, which link resources to industry and people to jobs, thereby stimulating productivity and ultimately encouraging private investment.

In this context, Australia supports hard projects aimed at improving physical connectivity of regions as well as soft projects for policy development and preparation of transport connectivity projects. While significant official development finance (ODF) is directed to roads, a key feature of this strategy is to help develop “trade enabling” infrastructure, especially in airports and ports, most notably in the poorest Asian and Pacific sub-regions of Indonesia, Papua New Guinea, and the GMS (DFAT, 2015).

Plans and examples of projects

Connectivity in the Greater Mekong sub-region (GMS)

Australia is committed to helping the countries in the GMS improve their connectivity. Two examples are shown below:

Cao Lanh Bridge in Viet Nam (2012-2018)

To enhance the opportunities of the 18 million people living in the Mekong Delta, Australia is providing a USD 127 million grant over six years to support the construction of a new bridge on the Mekong River in Cao Lanh. This project is expected to promote private sector investment, link isolated areas to major economic centres, provide better transport facilities to 170 000 daily road users, and ultimately enhance connectivity in the Mekong Delta (DFAT, 2015).

Addressing policy and regulatory barriers to connectivity in the Mekong

Australia supports soft projects in Cambodia, Lao PDR, Myanmar, and Viet Nam by addressing policy and regulatory barriers to connectivity and trade. This includes assistance to improve cross-border management, streamline transit procedures, and ensure that transport operators across the region can travel easily across the sub-region (DFAT, 2015).

Transport sector support programme in Papua New Guinea (2007-2020)

Australia finances the Transport Sector Support Programme in Papua New Guinea to develop a safe, reliable, and efficient transport network. The programme provides technical assistance to strengthen safety and security standards of civil aviation as well as land and maritime transportation. It also assists in the transport sector reform and helps build the capacity of the relevant authorities. The commitment for the second phase of this five-year programme is estimated at USD 400 million (Transport Sector Support Program, 2017). The following are example projects.

Air Services Limited – Capacity building for air navigation services in Port Moresby City (2013 - 2018)

With approximately USD 20 million, this project aims to build the capacity of Air Services Limited, a state-owned enterprise that provides air navigation services to all airline operators using the country’s air space. In this context, the Australian government funded the improvement of coverage by the Very High Frequency communication systems as well as training courses in air navigation (Transport Sector Support Program, 2017).

Global Maritime Distress Safety Systems (GMDSS) in Papua New Guinea (2012 - 2016)

This project of approximately USD 3 million financed the installation of the Global Maritime Distress Safety Systems Coastal Radio Station, thereby enabling Papua New Guinea to meet its international maritime safety obligations and to improve the safety of seafarers in its waters. In addition, this project upgraded the Maritime Radio Communications Centre in Port Moresby City, supplied the National Maritime College with modern communication equipment, and provided training on the GMDSS Coastal Radio system to private and public operators (Transport Sector Support Program, 2017).

The Indonesia Transport Safety Assistance Package (2014 – 2015)

With approximately USD 3.5 million, the Indonesia Transport Safety Assistance Package supported the improvement of transport safety management in Indonesia. Specifically, Australian transport agencies, such as the Australian Maritime Safety Authority, the Air Services Australia, and the Australian Transport Safety Bureau, assisted in building the capacity of their Indonesian counterparts to meet international aviation, maritime, and land safety standards. In total, 97 activities were carried out within this broad framework, with over 10 000 Indonesian transport officers trained via officer exchange programmes, workshops, and formal mentoring (DFAT, 2014b).

European Union

Strategies

The European Commission (EC) has a number of strategies aiming to increase trade through boosting connectivity. Some examples are given below.

Regional integration strategies

The Africa-EU Strategy, which aims to increase trade within the continent, prioritises, inter alia, co-operation in transport that includes hard and soft aspects. For hard infrastructure, the EC supports projects that particularly connect different transport corridors, such as the Trans-African highway corridors. For soft aspects, it focuses on regulatory reforms to harmonise relevant intellectual property rights, standards, investment codes, laws and guarantee systems. The strategy also highlights the importance of ensuring projects to invest in environmental, safety and social aspects (Council of the European Union, 2007).

Transport sector strategy

The EC considers connectivity projects to be essential in expanding access to markets which would enhance trade and economic integration. While support is given to all subsectors of roads, railways, airports and ports, a large share is allocated to roads for landlocked countries, as improving road connectivity between neighbouring countries is essential to their economic growth. In addition, EC projects in transport connectivity are increasingly focusing on support to relevant policies, reforms, institutional capacity building, and feasibility studies, as well as trade facilitation projects such as one-stop-border posts (European Commission, 2017b).

Developing social and economic infrastructure in developing countries

Aside from the EC, the European Investment Bank (EIB) also considers connectivity projects essential to development as they increase trade and economic growth. Hence, in its support to developing countries, particularly in eastern Europe but also in Africa, EIB finances connectivity projects aiming both at hard and soft infrastructure improvements. An example of a hard project that involves official development assistance-recipient countries is the upgrading of a railway from Ukraine to Moldova (EIB, 2016).

Plans and programmes

EU-Africa Infrastructure Trust Fund aims to increase infrastructure investments in sub-Saharan Africa by blending grants from EU member states and the EC with long-term loans from public and private financers. In transport, with an aim to enhance regional and continental integration of Africa, the fund supports exclusively connectivity projects - i.e. cross-border or national projects that are likely to have a demonstrable regional impact.

Western Balkans connectivity agenda

Under the Western Balkans Connectivity Agenda, the EU finances hard and soft connectivity projects. For example, in Serbia, it supports the expansion of rail and road corridors, improvement of core railway networks and the construction of intermodal terminals that link railways, roads and ports. Targeted corridors include those such as the Mediterranean Road Corridor between Croatia and Bosnia & Herzegovina as well as the Eastern Mediterranean Corridor which links the Former Yugoslav Republic of Macedonia, Kosovo, Montenegro and Serbia. For soft projects, the programme focuses on addressing technical standards in these countries in order to reduce non-tariff barriers among them and between this sub-region and the EU (European Commission, 2017a).

Transport Corridor Europe-Caucasus-Asia (TRACECA) Programme

Since 2000, the EC has been funding the TRACECA programme which supports hard and soft projects in the Black Sea Basin and Central Asia region. Its main objective is to strengthen trade and transport between the EU and these countries through the Trans-European Transport Networks (TEN-T), which is a set of planned highways, railways, airports and ports in the EU and neighbouring countries. The EC and EU member states therefore finance projects to improve transport hardware, including by improving the compatibility of different national transport systems, such as railways with different gauges. The programme also has a focus on soft transport, which includes support for the components below (TRACECA, 2017):

  • Ensuring dialogue and co-ordination: harmonisation of transport legislation in order to facilitate the flow of goods among the beneficiary countries and with the EU.

  • Infrastructure and network planning: advice for countries in selecting infrastructure projects.

  • Attracting funds: finding financing from member-states, international financial institutions and other stakeholders for projects that have been prioritised.

  • Capacity building: project investment appraisal, trainings on methodology and exchange of best practices for public officials.

  • Communication, visibility and information: exchanges with local and international media on projects.

Examples of projects

Bandajuma Liberian border road and bridges – Sierra Leone

This project consists of supporting the Government of Sierra Leone through a EUR 118 million grant to improve hard infrastructure at its border with Liberia by constructing three new bridges along the road between Bo Town and the Liberian borderland by upgrading a 99 km road from Bandajuma Village to the Liberian border to an all-weather standard. The project is expected to boost trade between the two countries and promote economic diversification (EEAS, 2016).

Supply, delivery and installation of equipment in inland ports - Democratic Republic of the Congo

This project, with a funding of EUR 5.4 million from the European Development Fund for 2015-2016, consists of rehabilitating several waterways in the Democratic Republic of the Congo, including some rivers between Kinshasa to Kisangani, part of the Kasai River in Kinshasa, and the Tanganyika Lake, in order to enhance the efficiency and safety of navigation. It supports the installation of cargo equipment and the improvement of port management. Expected results include: shorter time for loading and unloading cargo, alleviation of port congestion and increased connectivity between the Democratic Republic of the Congo and Burundi, United Republic of Tanzania (“Tanzania”) and Zambia (European Commission, 2018a).

Improvement of regional airports – Tanzania

The EIB is financing the upgrading and expansion of five regional airports in western Tanzania through a EUR 50 million ODA loan. The project is expected to enhance the business environment by strengthening transport connectivity in East Africa. It finances the improvement of the airport’s hardware by: provision of all-weather asphalt runways that currently cannot operate in the rainy season; construction of new terminal buildings; expansion of aircraft parking; and enhancement of airport links to roads. Furthermore, it tries to address soft aspects, such as the application of international safety standards in securing perimeter fencing and boosting efficiency in passenger handling (EIB, 2012; 2018).

France

Strategies

The French Development Agency’s transport strategy

The transport strategy of the French Development Agency (AFD) promotes safe, efficient, affordable, inclusive and sustainable green transport. The AFD states that effective transportation networks at all levels - local, national, and international - give people access to jobs, goods and services, thereby becoming the foundation for global and regional economic growth, sustainable development, and poverty alleviation.

In the new AFD Transport Strategy of 2017, regional integration of international networks is one of three “pillars” that would receive 25-50 % of its annual commitments in transport. It involves supporting the modernisation of airport infrastructure and services - rather than greenfield construction - as well as development of seaports and river infrastructure to enhance partner countries’ access to global markets. Furthermore, in countries where poverty reduction and economic growth are paramount, the AFD focuses on rehabilitating and building strategic national roads and railway lines, in order to foster inclusive and balanced development and to facilitate their integration in a regional economic community.

More specifically, in its support to transport connectivity, the AFD prioritises Africa - including North Africa - where the infrastructure gap is significant. Additionally, the AFD is committed to help improve governance, regional co-operation, and financial, economic and environmental sustainability in transport. This is carried out by capacity building to relevant government authorities. Aside from engaging institutions at regional levels to facilitate the implementation of regional transport development plans, the AFD co-finances key programmes with other development partners such as the World Bank, the EC, and so on (AFD, 2009; 2015).

Proparco’s strategy on transport

Proparco’s overarching strategy for 2017-2020 is to double its annual commitment to EUR 2 billion to increase the private sector’s contribution to development, as well as triple its impact on sustainable development, with a focus on Africa. In this context, Proparco considers efficient transport networks as key in accessing labour markets, services and goods, as well as in fostering regional and international integration of countries. As such, Proparco supports the construction and rehabilitation of road networks and airports, as well as rail and port projects, in order to boost import-export traffic, particularly in Sub-Saharan Africa (Proparco,n.d.).

Plans

Sustainable ports and airports

In a competitive market, the efficiency and good governance of ports and airports that are national monopolies is key for sustainability. The AFD therefore carries out dialogue with its partner countries to help maintain their competitiveness. Specifically, it prioritises support to the rehabilitation, extension, modernisation of existing infrastructure rather than greenfield projects. Furthermore, the AFD tries to help improve air navigation and control, customs procedure and financial and commercial management. It also addresses environmental concerns - particularly for ports - by focusing on energy efficiency investments and climate resilience strategies. The AFD also supports advances in technology to improve safety and security in ports and airports.

Road and rail: National connectivity

The AFD finances the rehabilitation, extension, modernisation - especially for signalling and electrification - of long-distance rail transport through sovereign loans, in order to help long-distance freight and passenger transportation become safer, more efficient and environmentally friendly. In this context, emphasis is given to enhancing railway management. In addition, the AFD finances the rehabilitation and the extension of long-distance and strategic roads that have the potential to integrate a country into a wider region. The aim is to help develop long-distance roads with safe and smooth traffic as well as to maintain them in a long-term sustainable manner. At the same time, the AFD is mindful of the need to keep the competitiveness of a potential close railway line.

Support to the Sub-Saharan African Transport Policy (SSATP) Programme

The AFD supports the SSATP Programme, which is a global partnership involving African countries, United Nations, the World Bank, other development agencies, and private sector organisations. The aim of this programme is to promote regional integration and connectivity of sub-Saharan African countries by helping them develop policies and strategies for efficient and sustainable transport. This includes, inter alia, building capacity of government authorities, other domestic institutions, and Regional Economic Communities (RECs) in corridor management. Since its establishment in 1987, the SSATP has helped 28 countries improve the governance, sustainability, and effectiveness of the transport sector in sub-Saharan Africa, 18 of which now have their own road agency that are independent from ministries. The programme has enhanced connectivity by developing efficient transport corridors across the sub-Saharan Africa, thereby boosting intra-trade and economic competitiveness (SSATP, 2015).

Examples of projects

Expansion and Rehabilitation of the International Airport of Nairobi (2009)

The Jomo Kenyatta International Airport in Nairobi is a key hub for Kenya and the East Africa region. However, relative to the large volume of passengers and goods, the airport’s infrastructure and facilities were saturated and insufficiently developed. To address this issue, the AFD provided a non-concessional and non-sovereign loan of USD 93 million to build a fourth terminal, a new landing runway, and a car park, as well as to expand and rehabilitate the existing terminals. As a result, this project has enabled the airport to improve its ability to deal with large flows of passengers and goods, thereby stimulating the economic prosperity of the region (AFD, 2015).

Supporting the Republic of the Congo’s Insertion into International Trade (2009 - 2014)

The Port of Pointe Noire in the Republic of the Congo has recently experienced considerable increase in maritime and trade flows. As the only port in the country that has the capacity to allow cargo ships to enter, it is one of its most important gateways to international trade and a crucial transhipment hub for the Central African countries. Therefore, with co-financing from EIB and the Development Bank of the Central African States, the AFD provided USD 34 million to expand its traffic capacity as well as to enhance its financial and environmental management. The project aimed at upgrading the capacity, modernising the cargo terminals and electric networks, purchasing two tugboats, and reducing maintenance costs. Furthermore, to address its growing maritime traffic, the container business was conceded to a private operator, which also invested in handling the infrastructure (AFD, 2015).

Rehabilitation of the railway between Hanoi and Lao Cai at the border with China (2007 – 2014)

To facilitate Viet Nam’s integration into the GMS, and stimulate international trade between Vietnam and China, AFD has co-financed the rehabilitation of 300 km of railway between Hanoï and Lao Cai. The aim was to facilitate the movement of goods and people between the port of Haiphong in Viet Nam and the Yunnan province in China. The project involved rehabilitating the tracks and several railway bridges, extending the stations’ platforms, and strengthening river banks, in order to increase the capacity, speed, and safety of the railway line, as well as to decrease transport costs (AFD, 2015).

Germany

Strategies

The Federal Ministry for Economic Co-operation and Development (BMZ): Economic infrastructures in aid for trade

BMZ supports the integration of partner countries into the global and regional economy by helping them improve their economic transport infrastructure and enhance their value chain and trade capacities (BMZ, 2011). Inherent to this strategy is the view that international trade fosters sustainable development and helps alleviate poverty.

German Corporation for International Cooperation GmbH (GIZ): Sustainable Infrastructure

GIZ has a strategy on Sustainable Infrastructure which aims at developing sustainable transport and mobility. Its view is that access to regional and global markets, coupled with efficient and climate-friendly transport systems, fosters economic and social development while curtailing negative externalities from increased transportation. Therefore, GIZ focuses on helping partner countries integrate in global trade while simultaneously addressing issues related to pollution and noise.

German Development Bank (KfW): Transport Strategy and Economic Growth and Employment Strategy

KfW’s view is that facilitating the movement of people and the exchange of knowledge promotes innovation and progress in an economy. Therefore, its Transport Strategy aims at helping boost the economy through sustainable and climate-friendly transport by developing urban transport, expanding rural roads, and improving long-distance and freight transport. More specifically, KfW focuses on connecting ports, airports, and long-distance roads and railways through cost-effective trans-regional links.

KfW also supports transport projects as part of its Economic Growth and Employment Strategy, which promotes, inter alia, the integration of partner countries in global trade. In this respect, KfW assists partner country governments in planning, implementing, and improving trans-regional transport links as well as logistic service provides for rails, roads, ports, and airports. According to KfW, between 2011 and 2016, 15% of the commitments in transport was allocated to long-distance transport, while 79% was for urban transport and 6% for rural transport (KfW, 2016; 2017).

Plans

GIZ: Sustainable Freight and Logistics Plan

As part of GIZ’s strategy on sustainable infrastructure, the Sustainable Freight and Logistics Plan aims to increase the efficiency of logistic systems, particularly by shifting to environmentally friendly means of transportation. Specifically, GIZ supports soft projects by sharing German expertise in capacity building projects for port authorities in greening logistics, sustainable freight transport, and implementation of social and environmental standards. GIZ also funds hard projects, such as the development of regional corridors that link landlocked developing countries (LLDCs) to seaports. Examples include the South African North-South corridor that connects five LLDCs in Southern African Development Community (SADC), i.e. Zimbabwe, Zambia, Botswana, Malawi, and Democratic Republic of the Congo (GIZ, 2017).

KfW: Logistics and Long-Distance Transport

KfW’s plan on Logistics and Long-Distance Transport is linked to its overall Economic Growth and Employment Strategy. The agency views that efficient and sustainable long distance transport enhances mobility across borders, promotes regional knowledge sharing and innovation, invigorates regional trade, and boosts regional economic competitiveness. The focus of this plan is therefore to shorten and optimise transport routes in order to reduce economic losses. By the same token, the plan aims at ensuring that the transport sector in partner countries is underpinned by sound climate protection measures to curb the negative externalities of increased transportation (KfW, 2017).

Examples of projects

Developing civil aviation in Afghanistan (GIZ)

This project, completed in 2012 with a USD 3 million grant funding, supported Afghanistan’s Ministry of Transport and Civil Aviation in establishing an Afghan Civil Aviation Authority and an Aircraft Accident Investigation Board. Most notably, it helped ensure that the Authority complied with the standards set by the International Civil Aviation Organisation (ICAO) and passed the required regulatory audits. This project has also helped train 23 Afghans in flight safety, operations, and licensing, as well as 47 air traffic controllers using German Aerospace Centre standards (GIZ/BMUB, 2014).

Regional Corridor "Kenya -South-Sudan Link Road" (KfW)

KfW is financing the construction of the Kitale Morpus section of the South Sudan Link Road, which connects South Sudan and a large underdeveloped area of Kenya to Africa’s Northern Corridor. The aim is to promote regional trade and to enhance economic integration, particularly by better connecting landlocked South Sudan with sea ports and other East African countries. This is also expected to improve the security situation in Northwest Kenya, which is often prone to conflicts, while reducing the number of accidents in the corridor. Apart from road rehabilitation, the project promotes road safety and social service delivery.

BMZ & GIZ: ASEAN - German Technical Co-operation Programme on Cities, Environment and Transport

Financed by BMZ and implemented by GIZ, the overarching purpose of the ASEAN-German Technical Co-operation Programme on Cities, Environment and Transport is to strengthen the Association’s capacity for environmental protection at the regional level. It therefore promotes greater harmonisation, co-ordination and knowledge sharing among the countries in areas relevant for transport connectivity as below (GIZ, 2017):

Transport and Climate Change

The Transport and Climate Change project aims at mitigating the environmental impact from increased mobility and enhancing energy efficiency of land transport in Indonesia, Malaysia, Philippines, Thailand and Viet Nam. In particular, this project fosters knowledge sharing and greater co-ordination in the areas of fuel consumption and emission standards, NAMA in transport, and green freight transport GIZ (n.d.a) Activities consist of training, workshops, experts’ meetings and research. Specifically, TCC has provided major inputs to the Kuala Lumpur Transport Strategic Plan (GIZ, n.d.b). Likewise, in Indonesia, the project involved drafting a White Paper on environmentally friendly freight transportation in co-operation with the Ministry of Transportation and local experts.

Sustainable Port Development

The Sustainable Port Development project aims at improving the management and quality of the workplace by enhancing the safety, health, and environmental standards of 12 ports across Myanmar, Viet Nam, Thailand, Cambodia, the Philippines, Malaysia, and Indonesia. This is carried out by involving all countries in the development of pan-ASEAN regional action plans and by encouraging greater compliance of international environmental and workplace safety guidelines in ports, thereby facilitating the harmonisation of such standards across the region (GIZ, n.d.a).

Japan

Strategies

“Quality growth” and poverty eradication

One of the priorities highlighted in Japan’s White Paper on Development Co-operation 2015 by the Ministry of Foreign Affairs (MOFA) is quality growth and poverty eradication. This is to be realised through, inter alia, promoting quality infrastructure to connect people, towns, regions and countries to unlock the growth potential (MOFA, 2015a). In this context, at the G7 Ise Shima Summit in May 2016, Japan launched the Expanded Partnership for Quality Infrastructure to bring together the Japan International Cooperation Agency (JICA), the Japan Bank for International Cooperation, Japan Overseas Infrastructure Investment Corporation, Japan Overseas Infrastructure Investment Corporation for Transport & Urban Development and other stakeholders. The aim was to provide approximately USD 200 billion in the following five years to infrastructure projects across the world as well as to boost infrastructure investment in Asia and other developing countries by involving the private sector through ODA (MOFA , 2015a; 2015b).

“Free and Open Indo-Pacific Strategy”

Japan included the new Foreign Policy Strategy - “Free and Open Indo-Pacific Strategy” - in its policies for development co-operation in 2017. Under this strategy, Japan will enhance “connectivity” between Asia and Africa through a free and open Indo-Pacific Strategy to promote stability and prosperity of the regions as a whole. In particular, Japan will assist in infrastructure development, trade and investment, business environment and human development from East Asia to the Middle East and Africa. In addition, in order to promote this strategy, Japan will strengthen strategic collaboration with India - which has a historical relationship with East Africa—as well as the United States and Australia (MOFA, 2017).

Plans

Support to the ASEAN Connectivity Master Plan

Japan supports the ASEAN Connectivity Master Plan through ODA and PPPs to enhance physical, institutional and people-to-people connectivity in the region. It does this in several areas that include hard transport infrastructure (e.g. roads and bridges, railway, airports and ports) as well as soft infrastructure (e.g. custom systems) (MOFA, 2015c).

Support to transport corridor master plans in Africa

Since 2013, JICA has been supporting the development of master plans for the three major transport corridors - West Africa Growth Ring, Northern Corridor, and Nacala Corridor (See Figure 4.1). Taking into account the Programme for Infrastructure Development in Africa (PIDA) and the interest of the private sector, these master plans try to address the long-term prospects for Africa’s economic development in 20 to 30 years, while simultaneously identifying short-term priority projects. These transport corridor master plans, which normally take two to three years to complete, are developed by collecting detailed data and stakeholder information to estimate population growth and the future demand for the corridors’ transport infrastructure. Surveys on the business and industry potential in these regions are also carried out, as well as analysis on the main logistical bottlenecks (JICA, 2017; n.d.a).

Figure 4.1. Japan’s support to transport corridor master plans in Africa
picture

Source: ICA (2017), Infrastructure Financing Trends in Africa – 2016, The Infrastructure Consortium for Africa Secretariat c/o African Development Bank, https://www.icafrica.org/fileadmin.d.ocuments/IFT_2016/Infrastructure_Financing_Trends_2016.pdf.

Developing these Master Plans requires working with African countries individually as well as collectively. Once completed, the Master Plans are expected to be submitted to the parliaments of the respective countries or included in their development strategies. For example, the upgrade of Mombasa Port is now included in Kenya’s “Vision 2030” as one of the highest priorities. In addition, after the adoption of the Master Plans by individual countries, RECs often co-ordinate the implementation of these Plans among states. The East African Community (EAC) for instance, has guided its member states to develop regulations to implement the various provisions of the Mombasa Special Economic Zone (SEZ) Master Plan. Other development partners besides Japan, such as China, EU and WBG, also funded hard and soft infrastructure projects around the Mombasa SEZ, such as the railway from the Port to Nairobi (JICA, 2017; PIDA, n.d.a).

Connectivity in Mekong

Every three years, Japan and the countries of the GMS establish a co-operation strategy for development. The last strategy, agreed in 2015, includes supporting the expansion of soft and hard infrastructure in the four transport sectors, i.e. airports, ports, roads and rail. Furthermore, Japan supports the construction of economic corridors, such as the Southern Economic Corridor, which links Viet Nam, Lao PDR, Thailand and Myanmar. On the soft side, it provides assistance to the modernisation of customs systems and streamlining of port procedures (MOFA, 2015b; 2015c).

One Stop Border Posts

Japan has provided support to 14 One Stop Border Posts (OSBPs) development projects in Africa, mainly in East Africa, with the aim of streamlining border clearance. OSBPs replace the border control system that involves a double procedure of one custom on each side by a system of single procedure. OSBPs significantly reduce the time of transit from one country to another, which contributes to enhanced connectivity and increased trade. Furthermore, the OSBP projects introduce an integrated IT system of border management that enables the countries to reduce the length of administrative procedures in sharing information on trade flows. The projects also include the creation of Joint Border Committees by government officials and private stakeholders to address trade obstacles linked to border-issues (JICA, n.d.b; US Chamber of Commerce and Africa Expoer Network, 2014).

Cross border transport infrastructure capacity Building and Research

JICA has carried out a series of capacity building projects on cross-border transport infrastructure (CBTI), mainly for railway projects in Africa and Asia (JICA, 2009). The activities include inviting officials from the national railways of different developing countries to attend seminars on high-speed railway, as well as facilitating exchange of experience in overseas operations by companies in railway-related industries.

For CBTI research, the need for transport infrastructure is measured according to the economic context of each region. On Africa, JICA focused on three areas in transport where Japan can significantly contribute its know-how. The first is on port development through improved connectivity to arterial roads and railways as well as on institutional capacity in simplifying port procedures. The second area relates to railways that involves upgrading management to increase the rolling stock. The third one concerns improvement of weighbridges and introducing IT at OSBPs, as mentioned above (JICA, n.d.b).

Examples of projects

East-West Economic Corridor Improvement in Myanmar

The East-West Economic Corridor Improvement in Myanmar project consists of constructing bypasses and bridges in the economic corridor that links the Mon and Kayin states. The objective is to help smooth the traffic between Mawlamyine (East coast) and Maywaddy (at the border with Thailand) in order to meet increasing traffic demand. Expected outcomes include the promotion of trade and foreign direct investment (JICA, n.d.c).

The Bay of Bengal Industrial Growth Belt Initiative

Within the framework of Japan-Bangladesh development co-operation, the Bay of Bengal Industrial Growth Belt Initiative aims to help Bangladesh in playing a node and hub role by connecting South and South-East Asia, mostly through roads and railways. The Initiative encompasses support to the development of hard transport infrastructure as well as the improvement of the investment environment (MOFA, 2015b).

Korea

Strategies

Economic Development Co-operation Fund (EDCF)’s Strategy on Transportation

EDCF Strategy on Transportation is to support projects aimed at building efficient infrastructure in developing countries in order to foster sustainable economic growth and eradicate poverty. More specifically, EDCF’s strategy involves developing specific plans for road construction and rail modernisation. For instance, EDCF is providing support in accordance with Viet Nam’s National Transportation Development Strategy 2020 by building coastal and inter-city roads to connect broad regions, as well as Egypt’s National Railway Restructuring Project by modernising the railway signalling system.

Korea International Cooperation Agency (KOICA)’s Transportation Mid-Term Strategy (2016-2020)

KOICA’s Transportation Mid-Term Strategy (2016-2020) is based on the idea that sustainable transportation infrastructure - such as trans-national railways, airports, and roads - connects people together across regions and countries, thereby significantly contributing to social and economic development. This strategy aims to promote inclusive and sustainable growth by helping partner countries develop safe, sustainable, and equitable transport systems among regions and countries. It involves setting up trans-regional railways, modernising airports, widening and rehabilitating strategic roads, and conducting feasibility studies. Furthermore, as part of this strategy, KOICA is taking a more active role in stimulating private investment from the planning stage of projects.

Programmes

Development Experience Exchange Programme (KOICA)

The Development Experience Exchange Programme provides capacity building, technical co-operation and knowledge-sharing on soft aspects of transport. Under this programme, KOICA assists in feasibility studies, master plans, and improvement of systems and management for trans-regional railways, expressways, and airports (KOICA, 2017).

Examples of projects

New Salendar Bridge construction project in Tanzania (2014 – 2020) (EDCF)

While Dar es Salaam is the second largest port-city and one of the main trading routes for landlocked countries in Eastern Africa, its population growth and number of vehicles have caused major traffic congestion. As a result, the Tanzanian government launched the Dar es Salaam Transport Policy and System Development Master Plan, which aims at developing an efficient transportation system for the city. To contribute to this Master Plan, EDCF is supporting the construction of the 1km-long New Salendar Bridge in order to connect the eastern coast of Dar es Salaam to the western coast of the port as well as to extend existing coastal roads. By improving connectivity of Northern and Southern regions of Tanzania through reducing traffic congestions in Dar es Salaam, the Export-Import Bank of Korea (KEXIM) expects to help foster regional development (EDCF, 2014).

Modernisation of the railway signalling system on Nagh Hamady and Luxor Corridor in Egypt (2014-2020) (EDCF)

As part of Egypt’s National Railway Restructuring Project, which addresses the lack of safety of the country’s railways, EDCF provided a USD 115 million loan - in addition to the World Bank and the EBRD - for the construction and modernisation of railroad signalling system. The loan financed the purchase of an Electronic Interlocking System and Automatic Train Protection System along 118km of the Nagh Hamady–Luxor section of the railway. Since the Egyptian railway serves 1.4 million passengers and transports 20 000 tons of freight per day, the modernisation is expected to help invigorate the tourist industry and foster international trade for Egypt. In addition, since the project also serves as a means for Korean companies to share their technology and know-how, the project is also expected to pave the way for co-operation with African countries in developing the railway network (KEXIM, 2016; EDCF, 2014).

Feasibility study for the construction of a new international terminal at Tashkent Airport in Uzbekistan (2016) (KOICA)

In 2016, KOICA undertook a feasibility study for the low-cost construction of a new international passenger terminal at Tashkent airport in Uzbekistan to deal with the increasing number of passengers. Following the study, the construction of the new terminal which would involve the private sector and cost USD 436 million, was approved by the Uzbekistan government. The increased capacity and modernisation of the Airport is expected to promote tourism in the country (UzDaily, 2016).

Modernisation and automation of Entebbe International Airport in Uganda (2014-2018) (KOICA)

KOICA is currently helping modernise the Entebbe International Airport and upgrade aviation safety at a cost of USD 9.5 million. Specifically, the project involves: installation of an airport database system and computerised maintenance management system; implementation of an Air Traffic Services message handling service; and improvement in the efficiency of flight procedures (Africa Business Communities, 2017).

New Zealand

Strategies

Ministry of Foreign Affairs and Trade (MFAT): Strategic Intentions 2016-2020

In the Strategic Intentions 2016-2020, MFAT states that New Zealand’s foreign policy focuses on playing an international role particularly in the Pacific region, which can have a direct bearing on the well-being of New Zealanders. More specifically, MFAT aims at, inter alia, enhancing the prosperity, stability and resilience of Pacific island countries (PICs) by promoting international solutions to environmental problems and strengthening regional economic integration. MFAT also works on increasing market access for New Zealand businesses and improving their international performance (MFAT, 2016a).

Strategic Plan for the Aid Programme 2015 – 2019

In the Strategic Plan for the Aid Programme 2015-2019, MFAT focuses on, inter alia, trade and labour mobility, with the aim of increasing economic benefits and outputs in developing countries of the Pacific. With this in view, New Zealand considers that many of the challenges faced by countries in this region are best dealt through a regional or multi-country approach. Therefore, MFAT has developed regional initiatives in different sectors, including transport. Specifically, it supports maritime and aviation’s hard and soft infrastructure, which are expected to improve connectivity and consequently trade and labour mobility (MFAT, 2015).

Examples of programmes and projects

Improving maritime safety

MFAT’s Pacific Maritime Safety Programme aims at improving maritime safety in the Pacific through the improvement of: regulatory capacity; maritime legislation; safety procedures and standards for maritime navigation; marine pollution prevention and response capability; and search and rescue response capability. It works in the Cook Islands, Niue, Kiribati, Tokelau Tonga and Tuvalu. The Pacific Regional Navigation Programme also helps improve maritime charts and navigation through hydrographic surveys and Aids to Navigation. It is delivered through a partnership between MFAT, Land Information New Zealand and the Secretariat of the Pacific Community. MFAT also finances maritime transport infrastructure in order to improve transportation links. These projects are expected to reduce risks associated with maritime navigation and, consequently, improve connectivity (MFAT, n.d.a).

Partnership arrangement for customs sector in the Pacific

The Customs Sector Development in the Pacific Programme (2017-2021) is concerned with increasing long-term security and economic growth of PICs through capacity building of customs administration. The project has established a regional assistance programme and partnerships with the Cook Island, Samoa, and Fiji. An evaluation of the project’s previous phase concluded that, for example, customs clearance time was reduced from an average of 145 hours to 25 hours (MFAT, 2016b).

Aviation infrastructure improvement in Kiribati

MFAT is financing approximately USD 5 million to support the infrastructure improvements in Kiribati’s two international airports, which connect the island with Australia, Solomon Islands, Marshall Islands, Fiji, Nauru and Micronesia. The funding, provided through the World Bank’s Pacific Aviation Investment Programme, includes the rehabilitation of runways, construction of a new emergency service building to host the aviation rescue and fire-fighting units, as well as the provision of improved navigation and communications equipment. Expected outcomes are increased regional trade and the number of tourists (MFAT, n.d.b).

Improving Pacific Air Safety Project (2015-2019)

Under the Improving Pacific Air Safety Project, MFAT is providing funding to the World Bank to install Very Small Aperture Terminals at the Rarotonga International Airport in Cook Islands and the International Airport in Niue. These terminals link international airports with a regional aeronautical communications network, resulting in reliable and faster aviation communications. This project also includes a Pacific Aeronautical Charting and Procedures component to upgrade aeronautical data, charts and approaches at 38 aerodromes across eight PICs (De Serio and Giovannitti, 2017).

United States

Strategies

United States Agency for International Development (USAID)’s support for soft infrastructure

USAID underlines that support for soft infrastructure can catalyse and mobilise significant amounts of investment from the public and private sectors. In general, USAID tend to fund more soft transport projects than hard transport infrastructure projects (USAID, 2016a). Thus in 2015, the majority of their financing of transport connectivity were soft projects, such as providing technical assistance to the public and private sectors to: prioritise, plan and maintain transport networks; regulate or manage the logistic system of the networks for ships at ports, flights at airports, trucks on roads, and so on.

USAID’s focus on disaster-affected countries

In transport, USAID focuses on the construction and rehabilitation of infrastructure and transport systems—including both hard and soft components - in conflict and disaster-affected countries to facilitate stability and economic recovery. For example, USAID has provided significant amount of finance in building and rehabilitating roads in Afghanistan, as well as assisting the Afghan government and private sector to expand, operate, and maintain the country’s road network. This includes helping the Afghan Ministry of Public Works to establish a governmental road authority and a fund which would be based on road user fees. This fund would pay for operations and maintenance, thereby improving efficiency and sustainability (USAID, 2016b; OECD/WTO, 2017).

Programmes

Trade Capacity Building Policy 2016 (USAID)

Trade facilitation is one of the main pillars of USAID’s Trade Capacity Building Programme. For example, the Agency supports border control agencies expedite the movement, release, and clearance of goods by enhancing customs procedures that involve, for instance, import licensing which adds to the cost and time requirements for trade. In addition, USAID finances the installation of weighing stations for lorries and warehouse facilities for inspection at the border (USAID, 2016a).

Examples of projects

Road Rehabilitation Compact Project in Senegal (2010-2015) (MCC)

The Millennium Challenge Corporation (MCC) and Senegal signed a USD 540 million Compact in 2009, aimed at reducing poverty and increasing economic growth by unlocking the country’s agricultural productivity and expanding access to markets. It included two primary projects: Roads Rehabilitation and Irrigation and Water Resource Management. The Roads Rehabilitation project was designed to connect major population centres and agricultural production areas through the rehabilitation of 372 kilometres of two of Senegal’s critical transport corridors in the North-West and South (MCC, n.d.).

The US-ASEAN Connectivity through Trade and Investment Project (2013-2018) (USAID and Department of State)

The US–ASEAN Connectivity through Trade and Investment is a five-year project of USAID and the Department of State. The project includes technical support to ASEAN member states on the creation of the ASEAN Single Window, which is an electronic system to streamline cargo clearance data so as to lower the time and cost of doing business across Southeast Asia. The Single Window will connect the electronic systems to streamline cargo data in 10 ASEAN member states, with the aim of lowering the transaction costs of trade in goods by at least 8% (USAID, 2014; 2015).

Gardez-Khost National Highway (2014-2015) (USAID)

The Gardez-Khost National Highway, a USD 33 million project by USAID, was a 101-kilometre road linking eastern Afghanistan with the Ghulam Khan Highway in Pakistan. The previous pathways that linked remote and insecure terrain were often impassable during floods or landslides. Therefore, the project built bridges, causeways, and drainage structures as well as asphalt pavements for the Highway under international standards. As an outcome, highway traffic has been increased with the average travel time from Gardez to Khost for passenger vehicles and trucks being significantly reduced (USAID, 2016c).

Bilateral development partners beyond the DAC

Brazil

Strategies

Brazil supports transport connectivity in Latin America and Africa through the Brazilian Technical Cooperation Agency (ABC) for soft projects and the state-owned Brazilian National Bank for Development (BNDES) for hard projects. The ABC’s objective is to leverage its knowhow to help other developing countries better manage their transport infrastructure as well as improve safety and working conditions. As Brazil is an emerging country that shares a similar development experience with other aid recipients, it sees its role in providing appropriate assistance to projects with limited resources and infrastructural constraints, such as in port improvement and airport management. Examples of ABC projects in transport connectivity include technical co-operation for Bolivian road transport institutions as well as capacity building in port management for authorities of the Cotonou port in Benin (ABC, n.d.).

Hard transport projects, on the other hand, are meant to help internationalise Brazilian private enterprises by providing them with public loans from BNDES, which often take into account political and credit risks. Between 2002 and 2006, the BNDES provided loans at interest rates varying from 2.8% to 8.6% to 14 Brazilian companies to implement projects in Latin America and particularly Lusophone African countries. In addition, Brazil also partners with DAC members, such as Japan and Germany, to offer complementary expertise (Cabral, 2011; Goes, 2017).

Examples of projects

  • enlargement and modernisation of Mariel Port (approximately USD 680 million) and the Jose Marti International Airport (USD 150 million) in Cuba (Cuba Headlines, 2015);

  • construction of Hacia El Norte highway in Bolivia (USD 199 million);

  • logistics corridor in Honduras (USD 145 million);

  • rehabilitation and expansion of the Central American highway in Guatemala (USD 280 million);

  • construction of the Nacala Airport in Mozambique (USD 125 million); and

  • expansion of the N2 national Highway in Ghana (USD 215million).

People’s Republic of China

Strategies

China has been rapidly increasing its foreign aid to other developing countries in the last decade (JICA-Research Institute, 2017), especially for infrastructure. According to the second White Paper on China’s Foreign Aid (State Council of China, 2014), about half of the 156 infrastructure projects from 2010 to 2012 were in regional transport, such as construction and rehabilitation of railways, highways and airports, although the amount of funding for these projects are not disclosed.

The Belt and Road Initiative (BRI)

In 2013, China launched the BRI with the aim of reviving the ancient Asia-Europe trade routes by land and sea (see Figure 4.2). The “Belt” refers to networks of roads and railways connecting China with the rest of Asia, Europe, the Persian Gulf, and the Mediterranean Sea. The “Road” refers to maritime routes connecting China with the South Pacific, as well as with Europe through the South China Sea and the Indian Ocean. Within this wide geographic coverage, the initiative also proposes six land-based economic corridors (see red lines in Figure 4.2) (NDRC/MFA/MOC, 2015).

Figure 4.2. Part of the projects under the Belt and Road Initiative
picture

Note: As of March 2017.

Source: Mercator Institute for China Studies (2018), China creates a global infrastructure network: Interactive map of the Belt and Road Initiative, https://www.merics.org/en/bri-tracker/interactive-map.

One of the main priorities of BRI is improving cross-border transport networks, especially railways (see red and pink lines in Figure 4.2). While the Initiative mainly covers the Eurasia continent, it also includes projects in Africa, with one rail planned to connect the East and West coasts and another to traverse Kenya, Rwanda, Uganda and South Sudan. In addition to rail, there are around 30 projects for port construction or upgrading on the West and East Coast of Africa and Southeast Asia. Likewise, BRI also supports airport construction, although they are not shown in Figure 4.2.

In order to fund these projects, PricewaterhouseCoopers (PwC) estimated that the Chinese government would have to provide up to USD 1 trillion in the next ten years, or on average USD 100 billion annually (PwC, 2016). Most of this funding is expected to be in the form of preferential debt funding. In fact, since 2013, the Export-Import Bank of China (CEXIM) and the China Development Bank (CDB) have financed around USD 260 billion of BRI projects (Xinhua, 2017), which translates to an average of USD 65 billion annually. More recently, China’s President Xi Jinping pledged USD 124 billion to the Silk Road Fund, which was launched in 2014 to provide loans for the BRI (Reuters, 2017).

At the same time, China calls for co-operation from partner countries and international organisations to realise this plan. In fact, China has signed co-operation agreements with more than 40 countries along and beyond the planned routes and expects to engage BRI with multilateral co-operation mechanisms such as Asia-Pacific Economic Co-operation and the Central Asia Regional Economic Co-operation (CAREC) Programme (NDRC/MFA/MOC, 2015). The Silk Road Think Tank Network (SiLKS) was also established in 2015 as a platform for joint research and knowledge exchange on development issues in BRI countries. To date, there are 54 members and partners in SiLKS, including: research institutions in Cambodia, Indonesia, and Myanmar; development partners such as EBRD, GIZ, and Swedish Agency for Growth Policy Analysis; and international organisations such as the OECD Development Centre, the International Road Transport Union, and the World Ocean Council. In terms of finance, AIIB, AsDB and the New Development Bank - set up in 2014 by Brazil, Russia, India, China, and South Africa - also finance BRI projects, although the last one is mostly supporting energy infrastructure.

Given the significant amount of investment under BRI, as well as its wide geographic coverage, there are ongoing concerns and discussions on the fiscal and environmental sustainability of involved countries. By some estimates, over half of the countries that have accepted BRI projects have credit ratings below investment grade (New York Times, 2017). In addition, the planned corridors of the Initiative overlap with the range of many endangered species. Furthermore, the transparency and sustainability of China’s bilateral support for BRI is questioned by media and some international organisations. Others call for the need for China to adhere to various standards for development co-operation and export credits established by the OECD-DAC and the Export Credit Group.

Programme example

The China-Europe Express Programme

The China-Europe Express Programme under BRI aims at connecting China and Europe by high-speed freight trains. This programme plans to build new railways across Kazakhstan, Iran, Turkey, and others, to connect China and Europe. Meanwhile, this Programme has already introduced direct freight trains based on two existing railways - the Trans-Siberian Railway and the railway linking China and Germany through northern Kazakhstan and Russia. China aims to complete this major infrastructure programme within ten years, possibly linking about 75% of the world’s population (NDRC, 2016).

In addition to the construction of railways, this Programme tries to enhance logistic procedures. For example, after a two-year negotiation and co-ordination, the railway administration in China and all other transit countries agreed to adopt a common consignment note that is recognised by two different railway systems - the Uniform Rules Concerning the Contract of International Carriage of Goods by Rail (CIM) of Western and Central Europe and the Agreement on International Goods Transport by Rail (SMGS) of Eastern Europe, Russia and most countries in Asia. This common consignment note serves as a customs transit and bank document - without this, clients need to pay for re-issuing different notes for each shipment at the border stations (International Rail Transport Committee, 2013; International Union of Railways, 2012).

Examples of projects

Based on project information from the Chinese government, recipient country governments, media and research institutes, it is estimated that in 2014-2015, China committed on average more than USD 8 billion2 a year to 21 transport connectivity projects in other developing countries in Asia, Africa, Latin America, and Europe. All commitments are for hard infrastructure projects, with 65% for railways and 30% for roads (Technical Notes in Annex A provides the project list). In addition, China also supports soft projects, such as feasibility studies for national highway or railway networks in Central Asia, and capacity building for transport authorities in African countries. However, as the amount of funding for these soft projects are not available, they are not included in the USD 8 billion mentioned above. In fact, since China’s financing cannot be verified by official sources, figures should be used with considerable caution.

Multilateral development partners

African Development Bank

Strategies

Regional Integration Policy and Strategy 2014-2023

One of the two pillars of African Development Bank (AfDB)’s Regional Integration Policy and Strategy 2014-2023 is regional infrastructure development. The objective of this strategy is to create larger and more attractive markets, link landlocked countries to international markets and support intra-African trade (AfDB, 2015).

Transport strategy

AfDB’s strategy in transport infrastructure prioritises economic integration. For hard aspects, it focuses on closing missing transport links, expanding and modernising existing infrastructure and promoting hubs and corridors that open landlocked countries to international trade. For soft aspects, AfDB concentrates on cross-border transport regulations—such as improving OSBPs - freeing up the airspace by implementing the Yamoussoukro Agreement, facilitating trade, resolving nontariff barriers, and improving logistics services (AfDB, 2015).

Plans and programmes

Africa50

To implement PIDA (See Chapter 1), Africa50 was created in 2015 as an infrastructure fund to support high-impact national and regional projects, mostly in the energy and transport sectors. Africa50 aims at closing the gap between infrastructure spending and needs in Africa by mobilising public and private sources, such as pension funds and investment funds from insurance companies. More specifically, it facilitates project development and channels capital from private investors into well-structured projects. Africa50 is owned by the AfDB and 23 African national governments (Africa 50, 2018).

Examples of projects

Road improvement and transport facilitation on Yaoundé-Brazzaville Corridor (Congo, Cameroon)

The poor condition of the road between Ketta in Congo and Djoum in Cameroon, which is part of the Yaoudé-Brazaville corridor, hinders trade between these two countries. Therefore, AfDB provided a USD 424 million loan to improve this 500 km road. Results include the increase of average speed of heavy goods vehicles from 30 km/h in 2009 to 80 km/h, reduction of average vehicle operating costs by 55% and enhanced trade between Cameroon and Congo by 11% (AfDB, 2018a).

Kazungula Bridge: Bridging the regional divide

At the North–South Corridor, ferries were predominantly used to cross the Zambezi River, which took transporters many days to travel, impacting negatively on trade. The AfDB therefore supported the construction of a road and rail bridge at the border of Zambia and Botswana to replace the ferries and reduce travel times. In addition to the hard components, the USD 260 million loans financed soft components of the project, such as feasibility studies and supporting institutional capacity building of the SADC Secretariat for project management (AfDB, 2018b).

Marrakech--Tanger Railway (Morocco)

AfDB supported the expansion of the railway between Marrakech and Tanger in Morocco. The project included the improvement of its catenary capacity, replacement of crossings and the establishment of a logistics platform. These enhancements are expected to increase train speed from 60km/h to 100km/h, thereby decongesting the railway system, which was facing growing flows of goods and people. The project is also expected to facilitate international trade by benefiting five zones in Morocco, namely Marrakech, Tanger, Casablanca, Zenata and Fès (AfDB, 2018c).

Asian Infrastructure Investment Bank

Strategies

The Asian Infrastructure Investment Bank (AIIB) is a new MDB established in 2015 with a mission to help improve social and economic development in developing countries by investing in infrastructure and other productive sectors (AIIB, 2016). In 2016, the new AIIB President Jin Liqun stated that, while the Bank would support BRI projects, it was not created exclusively for this Initiative (Weiss, 2017). In particular, AIIB considers “multinational connectivity” as one of its thematic priorities, i.e. cross-border infrastructure projects across Central Asia, South Asia, Southeast Asia, and the Middle East, including in transport (AIIB, 2016).

In the first two years of operation, AIIB lent about USD 4 billion to infrastructure projects, of which 74% were co-financed with other multilateral financial institutions (AIIB, 2018). In addition, AIIB expects its overall infrastructure investment to grow from USD 3-5 billion in 2017 to around USD 10 billion in 2018 (Financial Times, 2016). This ambitious goal is underpinned by the Bank’s abundant paid-in capital of approximately USD 20 billion in commitments, which accounts for 20% of its initial total capital. Moreover, the DAC’s Working Party on Development Finance Statistics agreed to place AIIB on the list of ODA-eligible organisations with an ODA coefficient of 85%, in order to incentivise DAC members to contribute more to the capital of the Bank (OECD, 2018,unpublished). As such, according to some estimates, AIIB could reach a portfolio of approximately USD 120 billion by 2025 (ODI, 2015).

Examples of projects

According to its reporting to the DAC, the Bank committed more than USD 1 billion for seven infrastructure projects in 2016, with two transport connectivity projects in Pakistan and Tajikistan accounting for USD 130 million. One project is the construction of a section of the national motorway in Pakistan, which is expected to connect seven main economic centres of the country, including Islamabad, Faisalabad, Multan, and so on. In addition to the AIIB’s USD 100 million, this project was co-financed by AsDB (USD 100 million), the Department of International Development of the United Kingdom (USD 34 million), and the Government of Pakistan (USD 39 million) (AIIB, 2017).

Asian Development Bank

Strategies

Sustainable Transport Initiative

The Asian Development Bank (AsDB)’s Sustainable Transport Initiative aims to guide support for policies and projects in transport systems that are safe, accessible, affordable, inclusive, low carbon, clean, and energy efficient. As part of this strategy, AsDB emphasises the importance of investing in cross-border transport and logistics.

Regional Co-operation and Integration in Asia and the Pacific

AsDB’s Regional Co-operation and Integration Strategy aims at, inter alia, increasing trade, investment, and financial stability, as well as improving living conditions by enhancing regional and sub-regional connectivity. Programmes to implement the strategy include cross-border infrastructure and related software (AsDB, 2017a).

Plans, programmes and examples of projects

South Asia Sub-Regional Economic Co-operation (SASEC) Operational Plan 2016-2025

AsDB launched the SASEC Operational Plan 2016-2025 to support Bangladesh, Bhutan, India, Nepal, Maldives, Sri Lanka and Myanmar in strengthening economic links and co-operation among themselves, particularly through better connectivity. One of the priorities of the Plan is to upgrade hard and soft transport infrastructure through: enhancement of multimodal linkages for land-based transport; reduction of container dwell times at ports; and improvement of access and reduction of congestion at border crossing points and ports. The focus is particularly on key trade routes such as the expressway between Dhaka and Chittagong in Bangladesh. The total cost of all transport connectivity projects in this plan amounts to approximately USD 17 billion (AsDB, 2016).

Akhaura-Laksam double track project in Bangladesh

As part of the SASEC plan, AsDB has financed the upgrading of 72km of the railway that links Laksam in Bangladesh with Akhaura that borders with India, as part of the Trans-Asia Railway Network, with the objective of facilitating sub-regional co-operation and trade between Bangladesh and India. The project consists of transforming this section to a double track railway line and installing modern signalling equipment (AsDB, 2017b).

Central Asia Regional Economic Co-operation Programme

Alongside six other multilateral institutions, AsDB supports the regional integration CAREC, which consists of eleven countries - i.e. Afghanistan, Azerbaijan, China, Georgia, Kazakhstan, Kyrgyzstan, Mongolia, Pakistan, Tajikistan, Turkmenistan and Uzbekistan. One of the objectives of CAREC in enhancing regional co-operation is to improve transport infrastructure. As such, in 2015 and 2016, the CAREC programme for regional co-operation financed nearly 30 transport connectivity infrastructure projects, mostly in the road sector, in order to develop economic corridors in Central Asia (AsDB, 2017c).

Uzbekistan railway electrification

As part of the support, AsDB provided a loan to electrify 145 km of a railway linking the cities of Pap, Namangan and Andijan in Uzbekistan. Before the electrification, trains had to bypass this section by taking longer routes or had to switch to diesel traction. As a result of the electrification, freight costs are reduced, 30% of time is saved for freight and passengers, and carbon emissions have declined. Moreover, it is estimated that the electrification could almost triple the weight of transported cargo from 2016 to 2030 and further quadruple by 2040 (AsDB, n.d.).

The Greater Mekong Sub-Region Programme

AsDB promotes the economic modernisation, liberalisation and industrialisation of the GMS. As enhancing the connectivity of the sub-region is crucial to this endeavour, one of the priorities of AsDB’s GMS Programme is to support regional or sub-regional transport infrastructure. In this context, AsDB has mobilised approximately USD 11 billion for connectivity projects in the GMS under the Programme.

Phnom Penh to Ho Chi Minh City Highway Project

As an example of the GMS Programme, AsDB is financing the rehabilitation of the highway between Phnom Penh and Ho Chi Minh. Besides hard infrastructure, the project supports soft aspects such as reducing bureaucracy and length of custom procedures at the border. As a result, the project has enhanced transport efficiency, increased trade, and created new business opportunities on both sides (AsDB, 2017d).

Brunei Darussalam, Indonesia, Malaysia and Philippines-East ASEAN Growth Area Programme

The main objective of the Brunei Darussalam, Indonesia, Malaysia and Philippines East ASEAN Growth Area Programme is to accelerate economic development through enhanced international connectivity in geographical areas that are distant from their national capitals. The programme includes assisting both the construction of hard infrastructure as well as soft infrastructure such as harmonisation of customs and security rules. Furthermore, AsDB is supporting the master plan development of, for example, the Sulu (Philippines) Sulawesi (Indonesia) maritime corridor (AsDB, 2017e).

Indonesia-Malaysia-Thailand Growth Triangle (IMT-GT) Initiative

AsDB provides technical and financial assistance to the IMT-GT Initiative, whose aim is to stimulate economic development through co-operation, integration, and connectivity of 32 poor states and provinces of these countries. In transport, AsDB focuses on expanding and improving economic corridors and multi-model transport links, which includes roll-on roll-off systems in ports to facilitate the transition of goods between ships and lorries (IMT-GT, 2012).

European Bank for Reconstruction and Development

Strategies

Strategy on transport

The European Bank for Reconstruction and Development (EBRD) views transport as a key enabler of economic growth that links businesses and consumers to markets and services, promotes regional integration, connects local, regional, and international levels, and integrates emerging markets into the global economy. In this context, EBRD aims at supporting the development of safe, secure, and sustainable transport systems, which embody market principles, balance economic, environmental and social needs and are responsive to the needs of industry and the individual, notably in emerging countries such as the South Eastern Mediterranean (SEMED) countries (Egypt, Jordan, Morocco, and Tunisia), Central Asia Early Transition Countries, Turkey, and Kazakhstan (EBRD, n.d.).Within this broad strategy, the Bank focuses on improving the efficiency and financial sustainability of the transport sector and developing sustainable, climate-friendly, and energy-efficient transport.

More specifically, in the SEMED countries, EBRD emphasises private sector participation in transport infrastructure, the establishment of competitive markets for transport services, and institutional development of the transport sector. In the ETCs, the Bank’s priorities are to support improvements in port and airport infrastructure and services; establishment or strengthening of road agencies, and institutional reforms in the railway sector. In Turkey, the Bank focuses on supporting restructuring of the railway sector and financing the expansion of recently privatised ports, while in Kazakhstan, the priority is on rehabilitating and developing key regional road corridors (EBRD, 2013; n.d.).

Programmes and examples of projects

Astana airport upgrade and tariff reform programme in Kazakhstan

Alongside the Development Bank of Kazakhstan, EBRD is providing a USD 42.5 million loan to upgrade the Astana International Airport, which is in need of expansion in order to cope with the increasing flow of passengers and traffic. More specifically, a runway will be modernised and new lighting and meteorological equipment will be installed. Furthermore, safety standards will be brought into compliance with ICAO regulations, while luggage handling services will be improved and expanded. EBRD is also promoting a reform to make tariffs for regulated airport services more flexible. (EBRD, 2015a).

Moroccan port of Nador (2015)

EBRD provided a loan of approximately USD 234 million to Société Nador West Med for the construction of a new port on the Mediterranean coast of Morocco, 30 km from the town of Nador. The aim is to enhance Morocco’s intra-national and international trade generate economic growth and create new jobs. Specifically, the project entails building a breakwater, dredging infrastructure, quays, terminals for container transhipment, and hydrocarbon storage. As EBRD focuses on promoting sustainable and climate-friendly transportation, a number of environmental protection measures are also incorporated, while the port’s carbon footprint is minimised by using lower-carbon cement (EBRD, 2015b).

Terminal for grain export in the Ukrainian port of Odessa (2014)

Given the importance of the agribusiness sector in Ukraine, EBRD supported the development of a trans-shipment terminal for grains with a capacity of 4.5 million tonnes in the Port of Odessa. Specifically, EBRD provided a loan of USD 60 million to Brooklyn-Kiev, a leading private stevedoring company to undertake the construction of the terminal. The aim of the project is to strengthen Odessa as a major grain handling hub, thereby stimulating economic growth in Ukraine and creating jobs in the region (EBRD, 2014).

Modernisation of the Manas airport (Bishkek) in Kyrgystan (2017)

EBRD is financing the modernisation of a terminal in the Manas Airport (Bishkek) through a USD 4.7 million loan and USD 500 000 grants to the airport’s operating company, International Airport Manas. The project addresses the growing demand for quality airport services in Kyrgyzstan. The financing was used to, inter alia, install ventilation and heating systems that comply with energy efficiency standards and improve the financial management and efficiency of operations. As the Airport is the main air gateway in Kyrgyzstan, this project is expected to enhance the country’s international and regional connectivity (EBRD, 2017).

Road repairs and upgrades in Bosnia and Herzegovina (2016)

In light of the damages caused by the recent floods in Bosnia and Herzegovina, EBRD has financed repairs and upgrading of the country’s road networks through a sovereign loan of approximately USD 76 million. The loan was also used to improve road traffic safety systems and procedures as well as enhance the management and procurement practices of the state-owned road company. With 70% of cargo and 90% of passengers resorting to roads for transportation in Bosnia and Herzegovina, the upgrading of the networks is expected to significantly contribute to the country’s connectivity (EBRD, 2016).

Inter-American Development Bank

Strategies

Partnering with Latin America and the Caribbean to Improve Lives (2016-2019)

The Inter-America Development Bank (IADB)’s strategy called Partnering with Latin America and the Caribbean to Improve Lives raises the lack of regional integration as a major bottleneck to sustainable growth, poverty reduction and inequality. This is due to insufficient regional infrastructure and its inadequate management, especially ports, roads, railways and inter-modal connections. Furthermore, trade and regulatory frameworks and slow border crossing procedures also reduce the efficiency of the existing regional transport system. As a result, firms of all sizes face major hurdles in becoming regionally and globally competitive, particularly in moving up the value chain. In fact, IADB estimates that Latin America and the Caribbean is at 50% of its intra-regional trade potential. Thus, the Bank supports transport projects that enhance connectivity in the region - including the software - in order to help overcome these obstacles (IADB, 2015).

Programmes

Initiative for the Integration of South America through Regional Infrastructure

IIRSA is a plan to link the region’s economies through connectivity projects in transport, telecommunications and energy. In transport, IIRSA projects are expected to increase trade by integrating highway networks and inland waterways throughout the continent. The Initiative was launched in 2000 with the participation of all 12 South American countries. IADB supports this plan by providing technical and financial support, as well as hosting the IIRSA Secretariat (IADB, 2011a).

Regional integration of Countries in the River Plate Basin

The Multisectoral Credit Programme for Regional Integration of Countries in the River Plate Basin - which includes Argentina, Bolivia, Brazil, Paraguay and Uruguay - supports projects in various sectors that aim at strengthening economic, social and cultural integration among these countries. In transport, the programme focuses on the development of international corridors (IADB, 2018).

Regional Integration Fund

In the context of limited intra-regional trade in Latin America and the Caribbean, IADB created a Regional Integration Fund to support cross-border infrastructure projects and the harmonisation of regional trade-related regulatory frameworks. Canada, Chile, Colombia, Mexico, Spain, the U.S. and other development partners have contributed to this non-reimbursable fund (IADB, 2011b).

World Bank Group

Strategies

Stronger Connected Solutions (2013)

The World Bank Group (WBG) points out that the increasing demand for consumption goods in emerging markets opens up the opportunity for manufacturing in new countries. This contributes to a more regionally based production model, which increases the need for better regional transport. Accordingly, the WBG supports a number of plans and projects whose aim is to enhance regional transport connectivity in developing countries (WBG, 2013).

Sustainable Mobility for All (Sum4All)

The WBG considers transport as a key sector in improving efficient, safe and green mobility and achieving the Sustainable Development Goals (SDGs). In this context, its strategy, Sum4All, aims at: reducing cost and time of transport; enhancing transport safety; improving access to jobs and services; and curbing carbon emissions through different transport modes. In implementing this strategy, the WBG particularly funds transport projects that enhance regional connectivity, including inter-urban roads. However, the Bank is also increasing funding to other types of transport such as ports, which has a clear regional dimension. In fact, in 2016, most of the International Finance Corporation’s transport commitments were allocated to ports (WBG, 2017).

Plans and programmes

Infrastructure Action Plan–African Region

The WBG’s Infrastructure Action Plan for the African Region aims at, inter alia, enhancing competitiveness and boosting employment. In transport, a focus is on improving connectivity in order to increase regional integration and trade. The Action Plan encompasses both hard and soft projects. On the hard side, the focus is on addressing missing links in transport; on the soft side, the plan concentrates on building the capacities of regional organisations in project development and operations, as well as helping improve the enabling environment for private investment in transport through reforms in labour and land regulations (WBG, n.d.).

Africa Transport Policy Programme

The WBG co-ordinates the Africa Transport Policy Programme, which is a partnership of more than 40 African countries, RECs and international organisations. It finances projects to integrate national transport networks regionally, improve transport management, and promote the inclusion of remote areas to transport networks. A trust fund finances projects for the management and monitoring of corridors, modernisation of trucking services, review of strategic plans, and co-ordination of policies through dialogue between RECs and national governments (SSATP, 2015).

South Asia Regional Integration Programme

Trading within South Asia costs more than trading between South Asia and other regions. As a result, intra-regional trade within South Asia consists of less than 5% of total trade in the region. The WBG states that, if barriers to trade with neighbours were removed, intra-regional trade in South Asia could increase from USD 28 billion in 2016 to 100 billion. Some important barriers to trade include precarious transport networks, onerous logistics and regulatory impediments. In this context, two of the three pillars of the South Asia Regional Integration Programme address regional transport and trade facilitation, with the aim of increasing regional trade. Relevant projects include support to the enhancement of logistics services and the development of economic corridors, such as the Mizoram Roads Regional Connectivity Project in India (WBG, 2018a).

Economic and Monetary Community of Central Africa Transport and Transit Facilitation Programme

The Economic and Monetary Community of Central Africa Transport and Transit Facilitation Programme is to help enhance access of Central African Republic, Cameroon and Chad to world markets as well as to promote regional trade among its member states. With this aim, the WBG supports the rehabilitation or spot interventions of the region’s corridors, such as the deteriorated sections of the Douala - N'Djamena corridor (WBG, 2018b).

Examples of projects

Aviation Investment Project - Vanuatu

The WBG provided a USD 60 million loan to Vanuatu in 2015 to finance the upgrading of runways, improve terminals, and enhance traffic control management. It also funded capacity building to identify the long term needs of air transport as well as to develop an Airport Master Plan and an Aviation Sector Strategy. The support is expected to make air transport more efficient and safer. Since aviation is a vital means of regional and global connectivity for this country, the project could have a significant impact on international movement of people and goods to and from Vanuatu (WBG, 2015)

Mizoram State Roads II Regional Connectivity Project – India

The Mizoram State Roads II Regional Transport Connectivity Project aims at improving the regional trade corridors in the Mizoram State of India, which borders with Myanmar. The USD 107 million funding from the WBG is directed to widen cross-border roads, construct truck stops and build the institutional capacity of the Public Works Department in managing the corridors (WBG, 2018c).

Regional Trade Facilitation and Competitiveness Project – Burkina Faso and Côte d’Ivoire

With USD 100 million loans, the Regional Trade Facilitation and Competitiveness Project supports the efforts of the Burkinabe and Ivorian Governments in enhancing trade by reducing transport costs and delays along the Abidjan-Ouagadougou corridor. Specifically, it aims at: the establishment of an efficient market for cargo handling and trucking services; improvement of operational efficiency at terminals; enhancement of the competitiveness of maritime and inland gateway; and streamlining transit and customs clearance through better information flows (WBG, 2017).

Regional Connectivity Project – Bangladesh

The Bangladesh Regional Connectivity Project aims to increase international trade by addressing transport-related bottlenecks. The USD 150 million loan is directed to reduce congestion by expanding the capacity of inland ports along rivers, particularly in strategic areas for trade with India, Bhutan and Nepal. It is also used to remove non-tariff barriers in ports by streamlining and modernising customs procedures (WBG, 2018d).

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Note

← 1. This document, as well as any data and any map included herein, are without prejudice to the status of or sovereignty over any territory, to the delimitation of international frontiers and boundaries and to the name of any territory, city or area.

← 2. The amounts of China’s finance for transport connectivity in 2014-2015 include all types of flows, namely preferential export buyer’s credit, concessional loans, interest-free loans and grants.