In the aftermath of Hurricane Mitch in October 1998, the Economic Commission for Latin America estimated the recovery cost of roads, bridges, and telecommunication infrastructure at more than US$571 million, or about 11 percent of the country’s gross domestic product. Damage was particularly severe to roads and bridges, water systems, and major cities, especially the capital Tegucigalpa. With nearly 60 percent of the road network affected, Honduras was confronted with severe obstacles to trade, transport, and development.
The Honduras Road Reconstruction and Improvement Project addressed the twin challenges of repairing the damage caused by Hurricane Mitch and enhancing the road network to spur a growing economy. In a division of labor with other agencies helping in reconstruction efforts, the World Bank focused on the reconstruction of roads and bridges. This project sought to build capacity in the road network by improving selected trade corridors, enhancing planning and implementation capacity in the national road agency (SOPTRAVI), and establishing a Road Fund to take responsibility for continued maintenance of the national network.
The Honduras Road Reconstruction and Improvement Project restored basic transit in key areas devastated by Hurricane Mitch, reestablished or improved important economic and trade linkages, and strengthened road management capacity. The Government of Honduras showed strong ownership of the project, especially in capacity improvements to the Road Fund and ensuring counterpart funding despite a tight fiscal environment. The performance of the private firm recruited to act as the Project Coordination Unit was outstanding.
Highlights:
- The project restored or improved more than 100 km of roads damaged by Hurricane Mitch. The bridges that were restored or replaced were designed to be more resilient in the face of future disasters of comparable magnitude.
- The project made improvements to more than 230 km of transport corridors linking commercial trade between the north, central, and southern zones of the country as well as with neighboring countries. This is fueling an increase in trade between Honduras and its neighbors and with the outside world.
- The project piloted a new system of road maintenance carried out through micro-enterprises: By the end of the project, 70 micro-enterprises employing almost 900 people were maintaining roads. With training, most of the micro-enterprises diversified their activities. For example, 44 percent of the micro-enterprises sell the trash picked up from roads to recycling plants, thereby generating additional income.
The Bank’s longstanding involvement in the Honduras road sector lent credibility to the its technical support during project design. The World Bank has financed nine highway projects in Honduras going back to 1955. Project design was based on economic and sector work and the lessons learned from previous Bank projects. The Bank was instrumental in the quick response to Hurricane Mitch. When the hurricane struck, the Transport Sector Rehabilitation Project was winding down. The Bank approved supplemental financing as well as resources from this project to assist with immediate road and bridge reconstruction efforts. The Bank also provided leadership by advising on maintenance contracting, the micro-enterprise program, and environmental and social safeguards.
As part of the policy dialogue on the road sector, the Government formally agreed to increase transfers to the Road Fund by 10 percent annually for 2007-10. With this increase, the Road Fund will receive sufficient revenues to cover the costs of its administration and operation as well as 85 percent of maintenance needs. Upon project completion, road maintenance provided by micro-enterprises was fully funded by the Government. It demonstrated an interest in continued Bank support to the road sector with a repeater project approved in FY08 and a further repeater planned for FY10. These operations will focus on governance and anti-corruption in the further strengthening of SOPTRAVI and the Road Fund, further trade corridor improvement and the extension of the micro-enterprise maintenance program to the unpaved network.
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