- Why has the World Bank made infrastructure a priority?
Our clients and shareholders have demanded more robust support for infrastructure. We continue to respond to this demand, as infrastructure is critically important for the development of any country. It is about delivering the essential services that people need to maintain a basic standard of living: water supply, sanitation, electricity, roads and other aspects of transport, and telecommunications.
These in turn lead to improvements in health, access to education, economic opportunities, and more. However, for millions of people, these basic services are still beyond reach. There are 1.1 billion people who lack access to a clean water supply and 2.6 billion who live without adequate sanitation. At the same time, 3 billion people lack access to modern energy for cooking and heating, and more than 1 billion people are without access to an all-weather road.
In sum, infrastructure is the motor of a country's economic growth, which has a central impact on poverty reduction for the neediest. We, and the rest of the development community, realize that significant improvements to infrastructure in the developing world are critical to reaching the Millennium Development Goals
FAQs
- Why did Bank financing for infrastructure fall during the 1990s?
During the 1990s, we reduced our investment lending for infrastructure with the expectation that private sector investment in infrastructure would rise. However, this did not happen. Private financing for infrastructure plummeted from $128 billion in 1997 to $58 billion in 2002, contrary to the expected increase. Bank investment lending for infrastructure dropped from $9.5 billion in 1993 to $5.5 billion in 2002. We are now fully re-engaged in infrastructure development to help fill this vacuum and to address the high demand for infrastructure services.
FAQs
- How has the Bank responded to the shortfall of private sector investment in infrastructure in developing countries?
Recognizing that we have a key role to play to meet global needs for infrastructure-related financing and policy advice, we've placed infrastructure front and center in our development agenda to reduce poverty and stimulate economic growth. We've developed an Infrastructure Action Plan, which encompasses innovative ways of financing infrastructure projects. Under the plan, we apply new and/or existing instruments more effectively, including a broad spectrum of public-private partnerships and financing sources and project financing at regional, national, and sub-national levels.
This is especially important at the municipal level where many infrastructure services are delivered, which calls for more local involvement. The creation of a Sub-National Finance unit, working jointly with the Bank and the International Finance Corporation (the World Bank Group’s private sector lending arm) will help to promote essential infrastructure financing. We've also strengthened the knowledge base and country analytic work in infrastructure to provide a better framework for policy dialogue and decision-making.
FAQs
- Will the Bank's focus on infrastructure mean less focus on social development issues like education and health?
On the contrary, the renewed focus on infrastructure has an even more positive impact on education and health. Infrastructure investment brings numerous benefits across a wide social spectrum. Investments in water and sanitation services lead to improved health. Proper transportation, electricity and connectivity are relevant to education and help children gain access to schools and higher levels of learning.
Rural infrastructure enables poor people to generate income by producing crops and goods with irrigation and electricity. Rural roads provide them access to markets. And investments in telecommunications help build markets and connect buyers and sellers cheaply. As well, investment in irrigation is important for water collection and storage, which is essential to protect people in developing countries against floods and droughts that inflict massive shocks on developing country economies.
Finally, the World Bank integrated its infrastructure, environment, and social development departments to ensure a more comprehensive and holistic approach to project work. Bringing environmental, social developmental, and infrastructure specialists as a team into a planning process right from the start, in consultation with governments and other stakeholders, should help to ensure that development is not just beneficial in the short term but also sustainable across time.
Updated: October 2007
