 The information below outlines the various options for managing and financing of local government roads and community roads, tracks, trails, paths and footbridges, and discusses their advantages and disadvantages.
KEY ISSUES - What is Rural Transport Infrastructure (RTI) and What are the Main Problems with RTI?
RTI consists of Local Government Roads, which are usually designated or gazetted roads, and Community (or village) roads, tracks, trails, paths and footbridges, which often are not designated or gazetted, that is, their legal status is unclear. The network of rural local government roads (without municipal or urban roads) in most countries constitutes about 70 percent of the total network, however, it carries only a small portion of the total traffic (between 10 percent and 20 percent of total veh-km). The total length of community roads, tracks, trails and paths is largely unknown although surveys indicate it is often twice the length of the local government road network in developing countries. Most of the community network is largely used by non-motorized vehicles, pedestrians and motor-bikes and is not passable part of the year by trucks and cars. Besides being in poor condition, the main problems with RTI in developing countries often are (i) inadequate local capacity for sustainable management and finance; (ii) unclear legal status; and (iii) the lack of a national policy or strategy for rural transport. The main underlying cause of these problems is weak local institutions. - What are the Institutional Options for Managing Local Government Roads?
Many countries lack clear institutional arrangements for management and financing of RTI. At the central level, there often are several sector ministries involved in rural roads investments (including the Ministries responsible for Transport, Public Works, Agriculture, Tourism, Water, Defense, etc.). At the local levels, RTI investments are financed and implemented by various NGOs, and multi- and bi-lateral donor projects. While many are involved in the planning and financing of capital works, there is insufficient attention to maintenance. It is common that local governments, which are often charged with the maintenance tasks, have not been involved in the investment planning process. Without a clear policy as to who owns and is responsible for the maintenance of RTI, well intended efforts aimed at improving rural access will be short-lived. In those countries which have defined a set-up for the management of their local government roads, there are five common models: Centralized model: - A special purpose rural road agency at central government level manages the local government roads on behalf of local governments. (Examples: Department of Feeder Roads (DFR) in Ghana, Local Government Engineering Department (LGED) in Bangladesh, Panchayat Raj Engineering Department (PRED), in many states in India.) Advantage: A national framework for planning and finance of roads and a focal agency with substantial technical capacity. Disadvantage: Decisions are made in the capital city, and consultations with local governments and attention to local priorities are insufficient.
Decentralized models: - Local governments manage the roads through their own Works Departments. (Examples: Nigeria, Tanzania). Advantage: In-depth understanding of local priorities and high stake in well-maintained roads. Disadvantage: Technically weak because local government agencies operate at small scale. They also suffer from shortage of funding, and lack of technical guidance from a focal agency.
- Local governments using a Contract Executing Agency (AGETIP). (Examples: many francophone countries in Africa). Advantage: Local governments plan works and delegate implementation to an agency which employs consultants and contractors to execute the work. This approach avoids cumbersome government procurement procedures and is usually efficiently and timely carried out since the AGETIPs staff is paid market based salaries. Disadvantage: AGETIPs are not subject to competitive bidding. This can be remedied if contract management agencies competed for the business. Because AGETIPs have been effective they often have erroneously been assumed to be financially sustainable. This is a misconception since they have in most cases depended on donor financing.
- Local governments forming Joint Services Committees (JSC). (Examples: Canada, Guatemala, New Zealand, USA.) Local governments come together and form JSC to provide road services, e.g., planning, and contract management. Advantage: JSC overcome the problem of small networks and provide scale economies. Priorities are set locally and JSC report to and are financed by client local governments. Disadvantage: JSC may require changes in statutes, and lack of previous experience with JSC can cause first attempt to be tedious. Central government may frustrate attempt due to lack of understanding.
- Local governments hiring Consultants: (Examples: UK, USA, Zambia.) Local governments contract out both physical works and the planning and management of works and contracts to the private sector. Advantage: Consultants are hired by and report to local governments who set priorities and remain involved in the planning and management process. Disadvantage: This system requires both well-developed local consultants and local governments. Local governments have to learn how to manage the consultants and be effective clients. In developing countries, technical support often is required initially from a focal agency. This system demands a certain contract size to attract competent consultants to work in rural areas, and local governments may form together in JSC to achieve scale.
These five models clearly can be mixed, for example, a local government can form a JSC which hires a contract executing agency to manage its planning consultants, or, a special purpose rural roads agency may hire consultants to plan and program annual maintenance. The key advantages of the centralized model constitute the drawbacks of the decentralized models and vice versa. The centralized model on the one hand is technically competent and enhances sector coherence, but has a tendency to tell local governments what they will get rather than listen to what they want. The decentralized models on the other hand are sensitive to the local context but technically weak, and, to create sector coherence and champion rural transport issues, often need a focal point at the national level for RTI to set standards, provide technical guidance and support, formulate policy, and intermediate with donors. The centralized model is a viable short to medium term option in countries with very weak local governments. In countries which are committed to decentralization, the decentralized models are superior. - What are the Options for Financing Local Government Roads?
Financing of local government roads is intrinsically linked to fiscal decentralization. The financial situation of local governments with regards to their roads is not much different from that which plagues many main roads agencies in most developing countries, just worse. There is total dependence on central government transfers for maintenance funds and on donors for capital works. Current transfer mechanisms do not encourage local resource mobilization and cost-sharing. While the lack of local resource mobilization to stretch recurrent allocations is a cross-sectoral issue of fiscal decentralization, it is fair to say that the new generation road fund has opened up a window of opportunity for financing of both local government roads and community roads which was previously not there. Four key issues related to road funds and local government roads are the following: i) road funds should be for all roads and managed by a representative board which includes representatives of rural constituencies, e.g., farmers associations and rural transport operators; ii) the allocation of funds between urban and rural local roads should preferably be set separately; iii) local governments need to be informed and trained on what they have to do to access the road fund, and what the funds can be used for; and iv) the road fund can be instrumental in strengthening the capacity of local governments to plan and program maintenance and rehabilitation. - What are the Institutional Options for the Managing and Financing of Community Roads?
Few countries have an institutional framework for non-public roads or community managed infrastructures. Community roads therefore have no legal owners. Communities' lack of legal status makes it difficult to regularly transfer public funds to them for road maintenance as public funds often can be transferred only to entities which can be held legally accountable. In addition, there are problems related to i) inappropriate standards; ii) the limited organizational and technical capacity that exists at the village levels; and iii) the shortage of funds in rural areas for the purchase of materials which are not locally available. Fortunately, the requirements for such are very limited for maintenance. While communities often can access funds for capital works through multi-sectoral and social funds financed by donors, there are no cost-sharing arrangements for maintenance. There are examples of private or non-government or community managed roads in Canada, Finland, and Sweden (PDF 8 KB) (and also from South Africa and Namibia). The system of private roads associations is working so well in Sweden, the associations are able to maintain roads of equal standards and vehicle flows at less than half the cost of an equivalent public road. The associations therefore are often asked by the Swedish road agency to manage the connecting public roads on their behalf for a fee. There are a number of countries in the Baltic and elsewhere which are embarking on similar institutional arrangements to meet the maintenance requirements of previously collective farms. These countries provide legal and financial incentives, for example, cost-sharing grants through which they assist groups of owners to cover the cost of road maintenance, as seen in an overview of the initiative to improve and sustain community roads in Zambiaand an overview of the main and rural roads project in Guatemala. Experience shows that people are motivated to organize themselves for their own benefit when they are granted legal ownership of the roads, provided technical advise, and can tap into cost-sharing schemes however symbolic not only for capital works but also for maintenance. Adaptations of this institutional model to developing countries is worth exploring and should rest on a clear division of responsibilities of government and local communities: - Government Responsibility: The Government through its rural roads agency must a) work closely with local governments to prepare an inventory of undesignated roads and important tracks; b) take the lead in providing a legal act under which roads can be designated to private road associations, and public funds transferred to road associations; c) cost-share or work with the road fund to provide grants for maintenance; and d) provide technical advise and oversight to local governments and communities, particularly in the initial phase.
- Community Responsibility: Local users form "Road Users Associations" to manage and finance the maintenance of their roads. Members of each association define rules regarding responsibilities and internal cost-sharing. General guidelines with regards to such rules and cost-sharing can be offered by the rural road agency. These cost-share arrangements leverage public funds with community contributions in cash or "in kind" (material and labor). Communities carry the lion's share of the maintenance costs. Annual grants are subject to satisfactory performance.
This model involves communities, government, existing road funds and donors in a partnership to bring community roads under regular maintenance. It encourages communities to take responsibility for their roads and provides a legal basis to permit cost-sharing. Experience indicates that the current discussion on private-public partnerships can gainfully be extended to the lowest level of the road network. In many developing countries, the largest private sector group are small-scale farmers. The road agency should seek a partnership with them for the management and financing of community roads. Such a private-public partnership may be the most successful contribution of the local private sector to the provision of infrastructure services.
KEY READINGS - World Bank Technical Paper No. 411: Options for Managing and Financing Rural Transport Infrastructure, 1998 (also available in French), Christina Malmberg Calvo.
- A slide presentation (PDF 267 KB) offers an overview of the Managing and Financing RTI topic.
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