Transport: Sector Results Profile

Challenge

Transport infrastructure and services still need to be made safer, cleaner and more affordable, particularly in developing countries. Provision of transportation needs to respond to:  increasing urbanization and motorization with solutions for urban mobility; rural poverty with more efficient and long-lasting accessibility solutions; and the need to make lower- and middle-income countries more competitive in the global market. The transport sector must be more responsive to create long-term skilled employment, to reduce the cost element of attaining food security, and to address mitigation and adaption to climate change.

Poverty reduction is more likely to occur when communities have ready access—at all hours and in all weather—to essential services and to markets.  Despite this knowledge, an estimated 1 billion people, or about 40 percent of the rural population in countries receiving International Development Association (IDA) support, lack direct access to an all-season road. Furthermore, lack of routine maintenance threatens the life of many transport infrastructure assets in the road and especially the rural road sector. Urban transport systems in developing cities face major challenges too, due to the continuous growth of urban population, private vehicle ownership and congestion, and the fragility or even absence of public transport systems.

Improvements in transport have the greatest impact on poor people when it is part of a cross-sectoral development agenda. Efficiencies are also gained through a multi-modal approach, such as to improve passenger and freight mobility. However, enhancing transport infrastructure and services is not enough.  The functioning of institutions and practitioners’ access to good knowledge are also crucial to effective transport solutions.

Solution

The transport sector plays a significant role in economic growth at the sub-national, national, regional and global levels, and both the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA) are facilitating more effective strategies needed to harness the sector's contribution to eliminate extreme poverty and boost shared prosperity.

IBRD lending in the transport sector focuses on facilitating economic growth and regional integration through national and international trade. High transport costs magnify the impact of distance and reduce trading opportunities, while good freight services can make traded goods more affordable and help developing countries to build more complex supply chains that facilitate trade. The IBRD focus on the reduction of transport costs for traded goods allows producers to increase their disposable income.

The multidisciplinary capabilities of IDA allow comprehensive initiatives that cut across economic sectors. For instance, IDA commitments help governments formulate national and rural transport policy, strategy and programs and develop sector-wide approaches and multi-donor cooperation for rural transport investment. Also, due to its work on multiple road programs, IDA has developed a strong capacity for diagnosing bottlenecks and can recommend solutions to encourage institutional innovation, such as second-generation road funds, for more successful implementation of new projects and programs. 

The portfolio of IBRD and IDA together is now more diversified in urban, rail, maritime and air transport, and contains projects aiming to improve trade competiveness through transport reform and investments. The share of lending in roads, as a percentage of total transport lending, has decreased from 68 percent in fiscal year (FY) 2007 to 60 percent in FY 2013.

Moreover, good governance, including anti-corruption activities, receives increased attention in IBRD and IDA activities within the transport sector.  The World Bank has adopted the Governance and Anti-Corruption (GAC) Strategy in its infrastructure advisory program and since 1999, it has developed a Road Cost Knowledge System (ROCKS) to monitor and benchmark Bank-financed road and highway project costs.

Results

Since 2002, the Bank-supported projects constructed or rehabilitated more than 260,000 kilometers of roads. Some results achieved by select IBRD/IDA-funded projects are as follows:

In Nigeria, the IBRD-funded Lagos Urban Transport Project (FY02-FY11) supported a bus rapid transport (BRT) system, the first of its kind in Sub-Saharan Africa, as an example of a comprehensive and integrated approach to improving public transport.  In Lagos, some 200,000 commuters per day are now using this bus system. In addition to safe, clean, and reliable transport, BRT passengers have also enjoyed a 30 percent decrease in average fares despite a 100 percent rise in fuel costs. Commuters have also cut their time in transit by 40 percent, and reduced the average waiting time by 35 percent. Time and money spent by poor households on travel was reduced from 90 minutes and Naira 150 in 2003, to 23 minutes and Naira 100 by June 2009.

A $20 million trade and transport facilitation project financed by IBRD and implemented between FY07 and FY12 helped facilitate the movement of freight between the Former Yugoslav Republic of Macedonia and neighboring countries in South East Europe by removing selected border zone bottlenecks and improving the efficiency and quality of road and rail services along the Trans-European Transport Corridor X. For example, waiting time for cars and buses at the Blace border crossing was brought down from 10 minutes on average in 2008 to 2.5 minutes in 2012 at the country entrance and from 12 minutes on average in 2008 to 1.9 minutes in 2012 at the country exit. This represents reductions in waiting time for vehicles of 75 percent as they enter and 84 percent as they exit. Freight train processing time dropped from 450 minutes to 90 minutes at rail Corridor X border stations, in part thanks to modern telecommunications system and border operations protocols involving Customs and Railways introduced by the project.

In Mexico, IBRD, in partnership with the Carbon Fund and the Clean Technology Fund, contributes to the transformation of urban transport toward a lower carbon growth path. The Urban Transport Transformation Program (FY10-FY17) proposed to reduce CO₂ emissions in Mexican cities by approximately 1.96 million tons per year beginning in 2017 through capacity building and the development of 18 integrated transit systems. This project represented a scaling-up of the prototype Carbon Fund project: Mexico City Insurgentes Bus Rapid Transit (BRT) System (FY06), which was the first surface mass transport corridor in Mexico City. At the end of 2012, 17 percent of the users of the Insurgentes BRT owned a car, but chose to use the BRT system, and demand had reached an average of 290,000 rides per weekday, with peaks of over 300,000 trips per day.

In Armenia, the Lifeline Road Improvement Project (FY09-FY14) rehabilitated about 442 km of the lifeline roads network. Since approval of the project, about 39,800 of person-month jobs was created during construction and road users are seeing a reduction in travel time of 58.5 percent on the road sections improved by the project. In addition, local designers and contractors successfully applied new technologies and appropriate and cost-effective design standards based on international practice, strengthening the sustainability of investments and improving road safety for pedestrians.

Rio de Janeiro Mass Transit Project (FY10-FY17) in Brazil aimed to improve the level of service provided to suburban rail transport users, to place the suburban rail transport system on a lower carbon growth path, and to improve the transport management and policy framework in the Rio de Janeiro Metropolitan Region. Through the implementation of an electronic single fare ticket card system, the project increased affordability, average savings of R$ 2.62 per user, while bringing reductions in travel time and when transferring between different modes of transport. Furthermore, an increase in formal jobs from 71 percent to 72.15 percent over the 2009–2010 period has been observed, as well as a more balanced job distribution throughout the region.

The Road Safety Project (FY10-FY16) in Argentina focused on contributing to the reduction of road traffic injuries and fatalities through institutional strengthening, improved management capacity for road safety, and the reduction of road crashes in selected pilot corridors. Within a year of project implementation, the use of helmets increased by 14 percent, the use of seatbelts by 4 percent, and the use of child restraint systems increased by 2.8 percent. In a context of a 15 percent increase in the number of registered vehicles between 2008 and 2011, a 12.5 percent decrease in road crash fatalities had also been observed.

In Senegal, the Dakar Diamniadio Toll Highway (FY09-FY16), has already provided significant benefits to the Dakar metropolitan area, the country's economic heart. Travel times between downtown Dakar and Diamniadio were slashed from about 90 minutes in 2009 to 30 minutes in 2013, reducing the cost of congestion (estimated at 4.6 percent of Senegal's GDP). The first toll road of its kind in Africa (outside South Africa), the Dakar - Diamniadio project mobilized financing from IDA, IFC, AfDB and the French Agency for Development as well as the private sector in a public-private partnership that shows potential for replication elsewhere in the region. IDA took the lead on social issues to mitigate the impacts of resettling 4,500 households and 1,200 business units, and to rehabilitate the neighborhood crossed by the toll road, with a focus on flood protection.

Bank Group Contribution

The World Bank’s engagement in transport projects has returned to pre-crisis levels, after tripling its commitments between FY04 and FY13. The share of lending for the roads and highways sector decreased to pre-crisis levels, with 60 percent share of lending in FY13 (the same value as in FY04); the same trend was observed for railways which registered 7 percent share of commitments in FY13. There was notable expansion in urban transport lending which reached 19 percent in FY13. For the ports and shipping sector, the investments have varied from 2 percent to 4 percent during the last decade.

The modal distribution of all transport projects funded by IBRD and IDA between FY04 and FY13 shows that roads and highways account for 57 percent, urban transport for 14 percent, railways for 6 percent, aviation for 3 percent, and ports and shipping for 5 percent, whereas the remaining 15 percent is distributed to general transportation and public administration in transportation. This more diversified modal split of the portfolio demonstrates the development potential of railways and maritime transport, particularly for long-distance general freight transport, and the vital role of air transport for example, in the shipping of high-value items that need to reach markets quickly.

The urban transport commitments have been constantly increasing during this last decade, from 7 percent in FY04 to 19 percent in FY13. This enhanced focus on urban transport reflects the Bank’s response to the escalating challenges posed by the dramatic growth of urban settlements in its client countries.

Partners

IBRD and IDA’s global reach and experience, together with their ability to work across disciplines and across different modes of transport, have laid the foundation for various types of collaboration. In the Latin America region, the Bank partners with other development banks and donors in collaborative projects. For instance, in Peru, IBRD has supported the Rural Roads Program in collaboration with the Inter-American Development Bank to upgrade the condition of the rural road network. In Asia, the World Bank is partnering with the Indian Government, state governments and various road agencies as well as the Asian Development Bank on the Prime Minister’s Rural Roads Program.

In Africa, the World Bank works with regional organizations such as the Regional Economic Councils, as well as multilateral initiatives such as the African Union’s Programme for Infrastructure Development in Africa, and the donor-coordinated Infrastructure Consortium for Africa. Within the World Bank Group, the International Finance Corporation (IFC) provided upstream advisory work to the Government of Kenya, in addition to debt financing in the Rift Valley Railways Consortium, while IDA provided Partial Risk Guarantees to the investor for termination risks and financed the East Africa Trade and Transport Facilitation Project (FY06). The success of this type of partnership is acknowledged by the Euromoney Award in 2007 for the “Africa Infrastructure Deal of the Year.”

In addition, due to its convening power, strong financial management and linkage with investment programs, the World Bank is playing a formative and key role in partnerships such as the Global Facilitation Partnership for Transportation and Trade, the Global Road Safety Facility, and the Sub-Saharan Africa Transport Program (SSATP).

SSATP is partnership of 40 countries across all Africa (North and sub-Saharan), 8 regional economic communities, African institutions, the private sector and development partners. The development objective of the program is for African countries to have developed sound strategies and policies for an efficient, safe and sustainable transport sector. The SSATP has critical contribution to the knowledge agenda of the World Bank. For example, in 2013 it provided a framework for improving railway sector performance in Africa, guidelines for mainstreaming road safety in regional trade corridors, as well as transport governance indicators for sub-Saharan Africa.

Moving Forward

Demand for transport infrastructure and services is expected to remain strong in both IBRD and IDA countries, and the Bank will continue to help countries bridge the access gap and achieve the Millennium Development Goals (MDGs).  The World Bank will continue to offer an extensive range of instruments, including investment loans, development policy loans, guarantees, and technical and advisory assistance to meet its objectives. It will support reforms necessary for facilitating private sector participation and for improving the efficiency of transport investments, while assisting borrowing countries with governance and institutional strengthening in order to foster ownership and accountability.

With growing urbanization rates, it is expected that many IBRD and IDA countries will become more urban than rural in the next 20 years. The World Bank has been increasingly involved in urban transport projects to improve the integration across urban services and to increase access of the urban poor to employment opportunities and health and education facilities. Nevertheless, the rural agenda will still benefit from the significant attention of the Bank as it looks forward to a more comprehensive framework of rural support, from project support for financing rural roads to approaches that foster broader government programs and policy reforms. 

The World Bank will remain active in the reduction of the transport carbon footprint.  It engages in innovative efforts to reduce emissions without endangering mobility  to exploit the true potential of climate policies and to reduce sector vulnerability by improving infrastructure services and ensuring resilient new investment. The 2013 report”Turning the Right Corner – Ensuring Development Through a Low Carbon Transport Sector” analyses relationships between mobility, low-carbon transport and development, and shows how policies can be organized to generate revenues that allow a transition to  low-carbon transport.

The World Bank transport sector strategy encourages green transport solutions. Through the Clean Technology Fund (CTF), a global partnership program administered by the World Bank, operations in progress and under preparation seek the deployment and transfer of low carbon programs and projects.

The SSATP is also promoting the creation of a Sustainable Transport Forum for Africa (STFA) in partnership with UNEP, UN Habitat and UN DESA. STFA will be a regional cooperation mechanism to engage participants from African countries in a policy dialogue on the challenges posed by the need for sustainability in the transport sector, in particular in the context of climate change, while meeting long-term development demands.

Special attention is given to co-benefits with other sectors, notably to the health sector through, for example, the implementation of HIV/AIDS awareness and mitigation measures. The inclusive development attributes are also illustrated by pilot interventions for women’s groups and spatial development programs for neighborhood infrastructure development targeting the poorest.

The World Bank continues to address transport safety as one of the major issues concerning developing countries. For example, The World Bank-led Global Road Safety Facility is working with seven other Multilateral Development Banks (MDBs) to harmonize road safety practices in client countries. The MDBs are committed to helping achieve the goals of the UN Decade of Action for Road Safety (2011–2020) which aims to save five million lives and avoid 50 million serious injuries by 2020.  

Beneficiaries

In the last decade, more than 100 million people have benefitted from World Bank-financed transportation projects.  Their individual testimony tells how projects have influenced their lives:

In the northern highlands of Vietnam, a project with IDA and United Kingdom financing is piloting efforts to train rural, ethnic minority women in road maintenance and then formally employ them for the work. The Lao Cai Provincial Women Union has been entrusted with the responsibility to manage and monitor the recruitment of these women who are living along the rural roads in four communes of Bac Ha District of Lao Cai Province.  More than 1,500 women were already trained by 2010, and more were awaiting their turn.

“Women like to do this work; they are competing to join. They think that maintaining the road makes the roads nicer, and more convenient for transporting commodities to develop the household economy. During this time of the year, it often rains so maintaining the roads during this time is good,” said Phung Pha Sui, an ethnic woman trainee.

On completion of the training, women were enrolled as road maintenance workers with the Provincial Women Union for a daily wage payment of about 100,000 Vietnam dong, meeting the required standards set out by the union. At dawn, women walk more than 10 km on foot with shovels and hoes on their shoulders to their workplace to do rural road maintenance:

“Dig soil ... Take out the grass … Trim the bushes … Clear drains ... A new job for us who previously only knew how to cultivate ... The road after maintenance activities will be better for villagers going to the market; and more convenient for teachers going to schools,"- said an ethnic female road worker.