World Bank Transforms Its Infrastructure Strategy

The World Bank Group’s infrastructure investments are helping people around the world improve their lives and overcome obstacles to prosperity.

In Sri Lanka, 110,000 households gained access to electricity through a renewable energy project in rural areas. In Rwanda, half a million people gained improved water services and 70,000 students benefited from improved hygiene facilities at schools thanks to a rural water supply and sanitation project. An IDA credit in Afghanistan attracted over $1.2 billion in private investments, improving access to information and communication technologies services and reducing their prices. In Russia, more than 1 billion Euro was mobilized via a public-private partnership to expand the St. Petersburg’s airport, increasing passenger traffic by 33 percent in the first year.

Infrastructure investments like these are critical to delivering growth and reducing poverty. Increasingly, infrastructure is also viewed as the agent of change to address the more systemic development challenges of today’s world, from social stability to rapid urbanization, climate change, natural disasters, and food and energy security.

Finding solutions to these challenges requires tackling the complexity and inter-connectivity of sectors. This realization―that infrastructure is more than the sum of actions by individual sectors―is shaping the global agenda, from the G-20 Summits in Korea and Cannes to the upcoming summit in Mexico and the Rio+20 sustainable development conference.

In response to this evolving context, the World Bank Group has developed an updated infrastructure strategy for FY12-15. Transformation through Infrastructure specifies what the Bank Group will do over the next three years in all the infrastructure sectors―energy, information and communication technologies, transport, and water.

“This strategy update lays out a framework for how to transform the Bank Group’s engagement in infrastructure across sectors in order to respond to demands for more cross-cutting and integrated solutions,” said Rachel Kyte, vice president of the Sustainable Development Network at the World Bank. “This is the next frontier for World Bank Group engagement and, if we get it right, it has the potential to accelerate growth and shift clients towards a more sustainable development trajectory.”

Andrew Steer, the World Bank's special envoy for Climate Change, described infrastructure as “one of the make-or-break issues in our march towards a sustainable world. It is critical that we get it right.”

Three pillars

The new strategy rests on three pillars:

• Core Engagement: The bulk of the Bank Group’s engagement will continue to be mono-sector interventions in support of the access to basic infrastructure services and the growth agenda. But enhanced effectiveness is needed in the areas of poverty, governance, and gender.
  
  
• Transformational Engagement: The Bank Group will scale up its engagement in tackling the more systemic development challenges. This will require reaching out beyond the line ministries and traditional partners; repositioning the Bank Group in global forums to lead the infrastructure debate; and facilitating knowledge transfer between clients instead of merely generating it. It will also require new types of projects—small and large transformational projects that seek to optimize spatial, green, inclusive and co-benefits.
  
  
• Mobilization of Private Capital: The Bank Group will need to start thinking beyond its own capital into mobilizing others, including the private sector, in finding solutions to ever-growing complex needs.

The strategy’s vision is anchored in country realities, with six World Bank Group regional action plans outlining how the strategy will be implemented.

In Sub-Saharan Africa, for instance, the strategy will involve more emphasis on regional projects that connect countries with power grids, broadband, transportation corridors, and large-scale renewable energy. In East Asia, it will involve partnering with city mayors, the private sector, civil society, regional organizations, and other donors to seek solutions to urban resilience and optimize low-carbon growth.

A strategy for the Whole Bank Group

Past infrastructure strategies—such as the 2003 Infrastructure Action Plan and the 2008 Sustainable Infrastructure Action Plan—centered on scaling up commitments for infrastructure. As a result, the World Bank Group emerged as the largest multilateral development financier in infrastructure, with US$30 billion in new commitments in 2010. It now represents 43 percent of the World Bank Group’s assistance. But the global crisis changed the playing field.

“This strategy will ensure a better Bank Group response for infrastructure financing at a time when governments are fiscally constrained and official development assistance flows have been reduced. There is an increased need to bring the private sector in the equation,” said Rashad Kaldany, vice president for Global Industries at the IFC.

Michel Wormser, MIGA vice president and chief operating officer, said the strategy “emphasizes the potential impact of bringing together the different members of the Bank Group, with our respective skills and instruments, in advancing transformational projects in our member countries."

Contributed by Nancy Vandycke, Lead Economist, Transport, Water, and Information and Communication Technologies Department, The World Bank