There are various deficiencies and challenges in transport connectivity of developing country regions, such as: missing highway links in Africa; under‑developed inland waterways in Latin America; poor quality roads in Asia; and low transport safety standards in Europe. As these challenges often have a negative impact on trade and economic growth, numerous regional or sub-regional plans and initiatives for transport connectivity have been developed. Examples include the Programme for Infrastructure Development in Africa, the Portfolio of Integration Infrastructure Projects in South America, Master Plan on Association of Southeast Asian Nations Connectivity, and the Trans-European Transport Networks.
Development partners therefore help enhance transport connectivity with the aim of increasing jobs, reducing poverty, stimulating economic growth, fostering regional co-operation, and facilitating countries’ integration in the global value chain. Some development partners have a geographical focus such as the Greater Mekong Sub‑Region or specific considerations such as landlocked developing countries, climate issues or transport safety. In general, the strategies and activities of development partners are aligned to the regional and sub-regional plans for transport connectivity. In addition, there are pooled funding facilities for projects that allow them to ensure coherence and co-ordination among themselves and with partner countries. Bilateral development partners beyond the Development Assistance Committee (DAC) - Brazil and People’s Republic of China—as well as the newly established Asian Infrastructure Investment Bank also play a significant role in this area.
At the same time, there are various issues inherent to transport connectivity projects, which generally have wide geographical coverage that involves multiple countries, many stakeholders and high costs. For example, trade-offs between transport modalities, environmental and social concerns, and geopolitical tensions need to be incorporated into project selection and planning. There are also challenges in co-ordination and harmonisation, i.e. synchronisation of project timing, the free-rider issue, standardisation of both hard and soft aspects, and the capacity of supra-national organisations. Debt sustainability often becomes a concern, given the large size of loans for the projects. In addition, there are broader trade and investment issues that need to be addressed, such as tariff and non-tariff barriers, as well as the productive capacity of developing countries. Moreover, it is also important to bear in mind the potential impact of technological innovation on transport connectivity, such as the development of 3D printing, autonomous cars and drones.
While transport connectivity is mostly financed by developing country governments, the 33 bilateral and multilateral development partners that report to the DAC committed on average USD 15 billion of ODF per year to transport connectivity projects in 2014-2015. In comparison, the private sector committed on average USD 52 billion per year. Here, development partners and the private sector appear to have different focus in financing transport connectivity - the former mainly in Asia and Africa or low-income countries (LICs) and lower middle‑income countries (LMICs) while the latter in Latin America and Europe or upper middle‑income countries (UMICs).
Yet, there is a significant financing gap. Estimates show that current spending on transport connectivity in developing countries need to be more than doubled in order to meet the SDGs. As ODF accounts for a small share of the total spending, development partners are trying to leverage private investment using ODF interventions. However, the amounts mobilised from the private sector are very small. Furthermore, they are generally in UMICs where the private sector is likely to continue financing transport connectivity even without these interventions.
