Going Forward from ADDIS 2010 : What Strategies for Road Financing and Management?

1. Going Forward from ADDIS 2010 : What Strategies for Road Financing and Management? By KingsonApara Team Leader, World Bank/SSATP

2. Reminder-Strategic Direction:Overall Goal of DP2: “Transport Policies and strategies contributing to regional integration, poverty reduction, and economic growth” Theme 2: Road Sector Management – DP2 Logical Framework Output:“Effective institutional and financial arrangements adopted for safe, reliable, affordable and accessible road transport services and infrastructure”

3. Achievements under the RMI: Good practice examples of “Effective institutional and financial arrangements have been adopted” in some countries through the establishment of: -second generation road funds in 30+ countries, -17 road agencies, -new financing instruments for road maintenance, -abolition of force account in most countries-institutional reforms to streamline sector management in most countries-commercial management principles in a few countries…..

4. …….. BUT A road only partially travelled by all countries:

5. Key Lesson Learnt. Achieving Safe, reliable, affordable and accessible road services and infrastructure remains a major issue in all African countries, and varies from one country to the other

6. Key message to Policy Makers: Political support and advocacy are critical to broaden the resource base and pursue the reforms to improve the coverage and quality of our roads. Endow Road Funds enough due diligence authority as veritable national donors to submit financing to results accountability

7. Key Message to Road Funds Road Funds need to lay additional emphasis on the value for money principle

8. Key Message to ARMFA ARMFA needs to re-write its TOR: • Reform Promotion • Results Standards & Enforcement • Data Quality and Reliability • Knowledge Building & Dissemination

9. Key Message to Road Agencies Adopt Commercial Management Practices

10. Key Message to ALL Promote management efficiency through improved monitoring and evaluation Step up advocacy for policy reforms and more resource mobilization, Ensure data availability to support analysis and decision making; Disseminategood practices; Establish standards as a reference to which countries can aspire to improve performance (CRI)

11. Key Message to all (Con’t) Establishing standards to help countries in decisionmaking and to enablecomparisonsacross countriesImplementìngmeasures to increase national resources in favor of roadsPromotingresearch and innovationStrengthening the capacity of continental organisations like ARMFA, AGEPAR, ASANRA, etc. as drivers

12. Suggested CRM Areas of Change :Road construction is a business: • should be managed on internationally recognized commercial lines; • owes its existence to the quality of its products • attracts investors only if financially viable (ROI) • Has an owner; the investor (public, private or community) • The owner defines policies and is responsible for success

13. Suggested CRM Areas of Change : The road is a commercial product • has a value (asset); • undergoes depreciation • has a price (to the beneficiary and to society), cannot be given out for free • should be depreciated, accounted • is produced (constructed), managed, maintained, protected and renewed (reconstructed) • fitness for user should be the overriding purpose (cost, time, comfort, health and safety, environment, etc.)

14. Suggested Financing Areas of Change: Everybody Pays; the user pays extra : • Extend “User pays” principle to “Beneficiary pays” principle? i.e. recognition that the road benefits everybody not just its direct users; Examples : Road tax; petroleum tax; import/export tax; road traveler levy (in addition to vehicle wner tax), etc. • Apply “beneficiary pays” principles on all road types without exceptions: Unsealed/sealed, low/high volumes • Depreciate newly constructed or reconstructed roads • Invest depreciation retentions exclusively for rehabilitations and reconstructions (renewals) of the same roads;

15. Suggested Areas of Change: More CRM • Routine maintenance is an operating expense • Its should be treated as variable overhead costs. Avoid external financing • Apply “Fitness for user” principle systematically in road designs • Outsource road management (i.e. change of status of road agencies) • Recruit key staff of RAs on results-based contracts? • Economic and Financial viability: Key area of due diligence oversight

16. Suggested Areas of Change: Monitoring/Advocacy An independently administered-Country Road Index (CRI) to rank countries by performance, for promotional and advocacy purposes • Awards for excellence: recognition for leading (good practice) results • Continuing improvement prizes –recognition (incentive) for progress • Results framework to guide country/Regional dialogue

17. Areas of Change: Critical Factors • Simplified and affordable tools to collect, analyze and compare data; RONET could be part of the answer • Readily available data on country road sector profiles and performance • Sustainable financing of data requirements; • Regional Roads Associations in driver seat; • Continued research and innovation; • Synergy building between continental organizations

18. What can be done from tomorrow? • Broaden the use and evaluation of RONET-to be discussed tomorrow • Establish and promote the use of a CRM Model • Develop a CRI 4. Promote Good examples Thank you very much