Infrastructure development in fragile states: Is it worth it?

By Pacific Region Team on Tue, 19 November 2013

Written by Patrick Safran, Principal Coordination Specialist for Fragile and Conflict-Affected Situations

Transport, energy, information and communication technology (ICT), and water infrastructure enable a state to grow its economy and provide a quality life for its citizens. Infrastructure, especially in fragile and conflict-affected situations (FCAS), contributes to rehabilitation and/or reconstruction efforts supporting state building. Infrastructure is important to counteract diseconomies of scale, isolated communities, high costs of accessing markets, and allow people to access basic services.

Is it really worth investing in infrastructure in situations of political instability, weak governance, economic insecurity, conflict, and vulnerability to natural disasters? Yes. The Asian Development Bank (ADB) has long been an important development partner for countries experiencing FCAS and has helped some of these states to make a successful transition out of fragility and conflict. ADB’s experience shows that infrastructure investment can deliver greater economic returns in fragile states, if the work is done right.

Infrastructure development supports statebuilding effort

State building in Cambodia began from a very low base after decades of armed conflict, extreme loss of human life and capital, and widespread destruction of public institutions. Since 1992, ADB has helped Cambodia to transform itself from a post-conflict country to a market-oriented economy that has achieved steady economic and social development. ADB’s work initially focused on rehabilitation in response to the country’s emergency needs in three priority areas: physical infrastructure, social infrastructure, and capacity building and institutional strengthening. This focus was later broadened to poverty reduction, broad-based economic growth, inclusive social development and good governance.

To strengthen coordination of assistance and improve aid effectiveness, ADB engages in technical working groups with government institutions and development partners, and civil society. ADB partners with civil society organizations in Cambodia to strengthen the effectiveness, quality, and sustainability of the services it provides. For example, nongovernment organizations were engaged to implement a program on gender capacity development under the Rural Road Improvement Project. An independent evaluation of the country program in 2009 concluded that ADB’s investment in physical assets and sector reforms boosted connectivity, lowered production costs, and encouraged foreign direct investments. Support to agriculture and rural infrastructure, despite implementation difficulties, paid off in the form of higher yields and extended markets. Regional cooperation initiatives, particularly through the Greater Mekong Subregion program, enhanced connectivity and information exchange between countries of the subregion.

In Afghanistan, ADB has provided assistance for the construction or upgrade of roads; rehabilitation of four regional airports; construction of a cross-border railway line; and power generation, transmission, and distribution. In 2012, the road from Yakawlang to Bamyan extending over 88 km was completed, reducing travel time by more than half. All four of the regional airports are now fully operational. Over 4 million tons of goods have been transported through the first railway line between Hairatan on the Uzbekistan border and Mazar-e-Sharif, and the line is part of a larger rail network planned across the northern and other regions of the country, including Herat, as well as to Pakistan and Tajikistan. ADB-assisted projects have added 510 km of power transmission lines, providing electricity to more than 5 million people.

The security situation in Afghanistan still makes it difficult to implement infrastructure projects. Security concerns also raise costs, partly by reducing consultants’ and contractors’ interest in implementing projects, limiting competition, and raising quality concerns. Lack of capacity in government agencies compounds the problem. ADB has addressed these by outsourcing project preparation and implementation to design engineers and supervision consultants engaged on long term contracts and placed within relevant Ministries with the dual role to build capacity. Turnkey contracts or design/built contracts are also used to implement large infrastructure projects rather than separating consultancy and construction, which is common in most ADB-funded projects elsewhere These approaches can yield results without compromising principles of governance, transparency, competition, and efficiency.  

In Timor-Leste, early projects administered by ADB and funded from the Trust Fund for East Timor prioritized ensuring peace and stability by quickly restoring the delivery of basic infrastructure services. Public investment projects—mostly roads, electricity, and water supply and sanitation—were undertaken in towns and remote villages; basic public services were restored where infrastructure had been destroyed, or where it became unusable due to lack of maintenance or staff and other resources. Part of Dili Port was rehabilitated to handle larger volumes of freight. Roads were also rehabilitated to allow the movement of goods, people, and security forces. In Timor-Leste, ADB has consistently been supporting the road sector to unite the country and contribute to the country’s efforts in state building.

The Pacific islands are small and geographically isolated; with largely scattered low density populations, underdeveloped markets; and high vulnerability to climate change. Here, ADB emphasizes climate-resilient infrastructure investments, such as water supply, roads, and ports, to increase regional and national connectivity, productivity, and food security. Investments are climate proofed to ensure their intended outcomes and benefits are not compromised. Infrastructure investments are also complemented by capacity development and institutional and policy reforms.

Ensuring lasting benefits

Public works in fragile states have generally helped secure peace and stability through job creation in the short term. However, the longer term challenge for these countries includes infrastructure maintenance. Lack of maintenance is costly in both an economic and social sense. Failure to manage and maintain infrastructure can contribute to economic loss. Early deterioration of infrastructure also affects people’s lives, limiting their access to health clinics, schools, and markets. Studies show that preventive maintenance provides a better financial return than investment in new infrastructure.

For example, comprehensive transport sector asset management arrangements have been included in all transport projects in the Solomon Islands where the National Transport Fund Act (developed with ADB support) was passed in 2010. This provides a long-term, sustainable mechanism for the rehabilitation and maintenance of transport infrastructure using donor and government’s own funding.

More importantly, for the benefits of infrastructure investment to last, both development and maintenance of infrastructure have to be accompanied by sound policies, capable institutions, and better governance, including community participation and ownership.