This review summarizes selected literature on gaps in infrastructure services in Sub-Saharan Africa and South Asia, and on the barriers that stand in the way of scaling up infrastructure. Castalia prepared the review as an input to the Department for International Development’s (DFID’s) Infrastructure Policy Framework.
The key documents reviewed were high profile publications from the World Bank, Asian Development Bank, other international organizations, and some private firms. Castalia also reviewed working papers and other analytical publications from such agencies. Searches of databases of peer-reviewed academic literature yielded only a few relevant papers. Most data on service coverage and service gaps is from the World Development Indicators database, which is widely cited in the literature.
After a brief overview of how the literature has evolved (section 2), section 3 summarizes the size of the infrastructure gaps, both in terms of service levels and in financial terms.
In the first instance, the infrastructure gap appears to be the result of a lack of financial resources for capital facilities, combined with inadequate operation of facilities that do exist. Financial resources are inadequate because user charges and government funding do not cover the cost of providing services. Private finance is available, but is only forthcoming where user charges plus government funding is sufficient to cover full costs, and there is a risk-adjusted return on capital, which is seldom the case. Section 4 examines the reasons for the lack of cost recovery: user charges that are too low; government funding that does not fill the gap; and capital and operating costs that are too high.
Generally, infrastructure facilities have high upfront costs. Finance from governments, or from private financiers, needs to cover these costs. Section 5 reviews the barriers to both kinds of financing.
The economics of infrastructure leads to market failures, and a strong rationale for government involvement. Government involvement, in turn, brings a complex web of political challenges, from inadequate accountability to outright corruption. The infrastructure sector provides opportunities for corruption because contracts often are very large, which can make corruption lucrative, and there are many transaction layers, which increase the difficulty of achieving transparency and accountability. The literature suggests that many of the barriers to infrastructure have their roots in these political challenges, as section 6 describes.
The remainder of the report focuses on specific topics of particular relevance to DFID: serving the poor (section 7), providing regional infrastructure (section 8), and providing infrastructure in conflict-affected states (section 9). This is followed by a Bibliography. Appendices provide detail on infrastructure gaps and a Appendix D Glossary of terms.
This report has been produced by Castalia Strategic Advisors for Evidence on Demand with the assistance of the UK Department for International Development (DFID) contracted through the Climate, Environment, Infrastructure and Livelihoods Professional Evidence and Applied Knowledge Services (CEIL PEAKS) programme, jointly managed by DAI (which incorporates HTSPE Limited) and IMC Worldwide Limited.
Castalia Strategic Advisors. Barriers to infrastructure service delivery in Sub-Saharan Africa and South Asia. Evidence on Demand, UK (2014) iv + 53 pp. [DOI: 10.12774/eod_cr.august2014.castalia]