World Bank Documentdocuments.worldbank.org/curated/en/...pacity and enable power to be transmitted across re-gions and states. Ô In Indonesia, a series of IBRD projects financed house-hold

THE WORLD BANK

IBRD Results

March 2010

Infrastructure at a Glance

The International Bank for Reconstruction and Develop-ment (IBRD) plays a key supporting role in the efforts of many developing countries to build the infrastructure vital to improving the lives of the poor. Clearly people need ac-cess to clean water and sanitation services, to reliable elec-tricity, and to safe and well-maintained roads to provide for their families and have the chance to pursue opportunities for education, better health, and work. However, there are still a large number of people in middle-income coun-tries that lack access to basic infrastructure, and the path to bridging this gap has become even harder given the im-pact of the financial crisis on the ability of these countries to raise the money to fund infrastructure development. Given this environment, IBRD’s role in providing financ-ing, knowledge, advice, and technical assistance is of even greater importance.

IBRD has an extensive record of success to point to in help-ing developing countries confront this particularly chal-lenging time:

Ô Energy. More than 30 million people have gained ac-cess to electricity and 700,000 Solar Photovoltaic (PV) systems have been installed in IBRD countries since 1990. The projects behind these gains have not only supported public access, but also essential reforms to improve the performance of publicly-owned utilities and to introduce forms of public-private participation including leases, management contracts, and inde-pendent power producers. Around 15,000 megawatts (MW) of power generation capacity has been installed or rehabilitated in member countries under projects completed between 2007 and 2009 alone.

Ô Transport. Over 40,000 km of roads have been con-structed or rehabilitated and another 40,000 km have been repaired or maintained in projects that were com-pleted between 2007 and 2009, bringing benefits in terms of access to jobs, markets, and social services and facilitating the extension of other infrastructure ser-vices. IBRD projects have also supported governments in designing and implementing policy measures to im-prove governance, and traffic safety, and in attracting private investment in the transport sector.

Ô Water. In the last decade, IBRD projects have financed access to water for more than 20 million people and sanitation to close to 10 million, while more than 100 million people have benefited from improved water resource management, pollution reduction, flood con-trol, and regulation of ground and surface water over the last decade. To ensure sustainability, IBRD has also helped clients improve sector management and gover-nance by supporting establishment and/or strengthen-ing of sector institutions.

Ô Urban. IBRD investments have improved the quality, quantity, and delivery of urban services such as slum upgrading, local economic development, and municipal management in more than 4,500 cities and towns. IBRD has supported reforms to help municipalities raise their own revenues through local taxes, levies, and user-fees.

Ô Information and Communications Technology (ICT). IBRD has provided policy and regulatory assis-tance for the telecommunications sector to more than 40 IBRD countries in the past decade, helping unlock political support for reforms and increasing private in-vestments in the sector.

Ô Crisis Response. To help mitigate the impacts of the global economic crisis and create jobs, IBRD has pro-vided US$19 billion to governments for counter-cycli-cal stimulus between October 2009 and January 2010.

Infrastructure Brief

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Infrastructure BrIef2

Some specific results achieved through IBRD financing in-clude:

Ô In Argentina, IBRD supported fiscal and administra-tive reforms in the municipal public sector. Critical infrastructure investments and modernization of mu-nicipal administrations were implemented in 10 prov-inces in the 1990’s, improving the lives of 7 million residents and the performance of over 500 municipal governments.

Ô In China, IBRD supported projects for the develop-ment of renewable energy, including to remove techni-cal, administrative, and capacity constraints that limit competitiveness of alternative energy sources. Under IBRD projects, off-grid solar power systems were pro-vided for close to 400,000 rural families in the North-western provinces over the last decade. This helped Chinese producers of photovoltaic (PV) systems meet high standards and compete on international markets and contributed towards making China the largest ex-porter of solar panels in the world.

Ô In Croatia, IBRD has supported government efforts to improve the quality of Adriatic coastal waters to pre-serve tourism, which accounts for 25 percent of gross domestic product (GDP). By improving wastewater collection and treatment, and strengthening institu-tions and environmental monitoring, the IBRD-sup-ported Coastal Cities Pollution Project benefited an estimated 146,000 residents and 225,000 tourists.

Ô In India, IBRD was actively involved in the reform and development of the transmission sector through the creation and strengthening of the Power Grid Corpo-

ration. Through a series of five loans since 1993, IBRD helped enhance the country’s power transmission ca-pacity and enable power to be transmitted across re-gions and states.

Ô In Indonesia, a series of IBRD projects financed house-hold electricity connections for more than 25 million people between 1991 and 2003.

Ô In Morocco, IBRD supported reforms that enabled the award of a competitive mobile phone license and contributed towards increasing the mobile telecommu-nications market to 7.3 million in 2003 from less than 117,000 subscribers in 1998. This reform model was re-peated in other countries, including Algeria, Mali, and Mauritania.

Ô In Paraguay, the Fourth Paraguay Rural Water and Sanitation project provided access to 325,000 rural res-idents, 25,000 of whom were indigenous community members, through the construction and expansion of over 600 water supply schemes and provision of 23,000 latrines.

Ô In Peru, improved rural transport services were pro-vided to over 3.5 million rural Peruvians between 2002 and 2006, resulting in reduced travel time and cost, increased access to social services such as schools and health centers, and improved economic oppor-tunities. About 600 small companies were created for road maintenance and more than 600,000 direct jobs were generated, of which 30 percent were filled by women.

Ô In Poland, IBRD supported a series of projects in the transport sector between 1997 and 2006 to help the government respond to the rapid increase in the num-ber of cars in the country and to improve road safety. IBRD projects helped increase the share of roads in good and fair condition in the country to 53 percent from 46 percent and general backseat belt usage in cars to 50 percent from 38 percent.

Ô In Romania, IBRD support for implementation of Romania’s regulatory framework for electricity and an IBRD partial risk guarantee (PRG) helped the govern-ment attract investors in 2004–2005 to five electricity distribution companies. The first two privatizations were directly supported and the other three were fa-cilitated by the PRG. This model of IBRD support was replicated in Albania in 2009.

IBrD resuLts 3

Infrastructure – Overview

Challenge. Despite widespread recognition of the impor-tance of infrastructure services for poverty reduction, an estimated 880 million people still live without safe water, 1.5 billion people live without electricity, 2.5 billion people live without sanitation, and more than 1 billion people are without access to either an all-weather road or telephone services. These figures represent enormous hurdles to a better standard of living and economic prosperity for the people of developing countries. Today, IBRD client coun-tries—including those eligible to access additional sup-port through the International Development Association (IDA)—are home to more than 70 percent of the world’s poor.

While IBRD countries are better-positioned than IDA countries to access private capital markets, they continue to face huge financing shortfalls, which have been exacerbated by the global financial crisis. The crisis has made financing (both debt and equity) more difficult to secure as access to capital markets and bank lending has been reduced or halted, and risk perception has increased. At the same time, faced with declining fiscal receipts and the need to increase spending on immediate social needs, developing country governments are finding it difficult to maintain financial commitments to infrastructure projects.

Approach. IBRD’s guiding principles for responding to these challenges is encapsulated by the 2008 Sustainable Infrastructure Action Plan (SIAP). This outlines a renewed commitment to client countries to improve the reach and quality of infrastructure service delivery in a sustainable manner through increased financial and analytical support and leverage. SIAP outlines the “triple bottom line” ap-proach to support: (1) economic and financial viability in the infrastructure sector to better equip it to contribute to economic growth; (2) social inclusion whereby infrastruc-ture goods and services are provided to the poor, to remote communities, to women, and to other historically disadvan-taged groups; and (3) local and global environmental sus-tainability.

Client countries are increasing looking to IBRD for sup-port in addressing intensifying global trends:

Crisis response. The global financial and economic crisis poses a risk to long-term infrastructure investment pro-grams, which threatens to undermine progress on access and economic growth. As part of the WBG’s response to the financial crisis, the Infrastructure Recovery and Assets Platform (INFRA) was launched in early 2009 to protect existing assets and priority projects and maintain spending on infrastructure. INFRA supports counter-cyclical financ-ing of infrastructure and more effective collaboration be-tween development partners on crisis response (see Box 2 for Regional Responses to the Crisis).

The World Bank Group’s private sector arm, the Interna-tional Finance Corp. (IFC) launched a complementary crisis response initiative—the Infrastructure Crisis Facility (ICF)—in April 2009 to mobilize up to US$10 billion to support private and “public-private partnerships (PPP) in infrastructure development in emerging markets and devel-oping countries. The aim is to enlist private sector support to stabilize viable existing infrastructure projects that are fac-ing temporary liquidity problems, and enable some continu-ation of new project development in private infrastructure.

IBRD works closely with IFC and another Bank Group arm, the Multilateral Investment Guarantee Agency (MIGA) to support public-private partnerships in IBRD countries through a range of initiatives: by improving legal and regulatory frameworks; boosting output-based aid; mobilizing local long-term currency funding for infrastruc-ture; supporting financial intermediaries; supporting trans-action preparation; providing credit enhancements; and partial guarantees.


Climate Change. IBRD continues to help governments respond to and mitigate the impact of climate change, de-veloping and testing first-generation adaptation screening tools such as climate risk screening and carbon accounting, assisting interested countries to shift to a development ap-proach based on low-carbon growth pathways, and expand-ing financing for low carbon investments, infrastructure development, policy, and institutional reforms.

Spatial Dimensions. To implement the lessons and rec-ommendations of the World Development Report 2009 (WDR 2009), Spatial Disparities and Development Poli-cy, the spatial dimension of development are being more

explicitly incorporated into IBRD projects supporting rural-urban linkages across cities and countries. Spatial analysis tools, such as Geographic Information Systems, are being used to strengthen the institutional enabling environment and capacity for undertaking solid spatial analysis.

SIAP also emphasizes the use of World Bank Group’s con-vening power and its global presence, including through systematic sharing of knowledge, skills, and experience for responding to infrastructure challenges (See Box 1 for ex-amples of global knowledge and skill sharing).

Portfolio. IBRD financing for infrastructure has increased sharply under SIAP and INFRA. From a low of US$2.5 bil-lion in FY2002, IBRD infrastructure financing increased to US$7.8 billion in FY2008 and $12.7 billion in FY2009 (Figure 1). Much of the increase in lending in FY2009 is linked to IBRD’s support for client countries coping with the effects of the financial crisis (see Box 2 for World Bank’s regional response to the crisis). There has also been an in-crease in the number of projects jointly supported by IBRD and IFC and MIGA. Some notable examples of IFC and IBRD projects approved in FY2009 include the PADGO Risk Sharing Facility for renewable energy in Sri Lanka and the Indonesia Infrastructure Financing Facility.

In parallel, the World Bank financed more than 800 tech-nical and policy studies on infrastructure issues for IBRD countries during 2005–2009 to support the country level and global knowledge base on infrastructure in IBRD countries (see Box 3 for selected list of publications on in-frastructure).

Results. IBRD has played an important role in helping member countries respond to their infrastructure chal-lenges in a sustainable way. IBRD has not only provided much needed financing to countries for increasing access to infrastructure services but has also helped provide cut-ting edge knowledge to advance sector reforms necessary for improving efficiency of investments, improving gover-nance, and for transformational ‘green’ infrastructure in-vestments. IBRD contributions to infrastructure sectors of member countries in recent years can be summarized as follows:

BOX 1

Sharing of Global Knowledge, Skills and Experience

Making use of World Bank Group’s global presence and experience, IBrD has facilitated systematic sharing of knowledge, skills, and experience in infra-structure among client countries, including collabora-tion and information exchange between developing countries. IBrD experiences in one country or region have been used to develop projects and approach-es elsewhere. In some instances, methods and ap-proaches developed in IBrD countries have been successfully transferred to IDa countries. some key examples include:

Sanitation. Innovative approaches such as sanita-tion Marketing and total sanitation that help generate sanitation demand at scale and increase the supply of sanitation products and services, have been trans-ferred between east and south asia, Latin america and africa.

Energy Efficient Cities. Best practice approaches to developing more energy efficient cities are being dis-seminated across the world and applied in armenia and south africa. approaches and methods devel-oped in Mexico will be replicated in Brazil.

ICT. the reform model for the award of competitive mobile licenses developed in Morocco has been suc-cessfully replicated in other countries such as alge-ria, Mali and Mauritania.

IBrD resuLts 5

Ô Access. IBRD projects have provided electricity, roads, safe water, improved sanitation and slum upgrading to millions of people, easing access to health and educa-tion services and significantly improving their quality of life. More than 30 million people have gained access to electricity since 1990; more than 20 million people have gained access to safe water and 10 million people to improved sanitation in the last decade.

Ô Economic Growth. IBRD infrastructure investments have helped improve enterprise and household pro-ductivity, competitiveness, employment and economic growth in client countries by reducing power outages and transport costs, improving telecommunication services, and ensuring water security. Over the past decade 15,000 MW of power generation capacity has been installed or rehabilitated in member countries; about 43,000 km of roads have been constructed or re-habilitated and another 39,000 km have been repaired or maintained; and 100 million people have benefited from improved water resource management including

pollution reduction, flood control and improved regu-lation of ground and surface water.

Ô Climate Change/Environment. IBRD has been a major source of financing for undertaking transforma-tional “green” infrastructure investments in member countries, including renewable energy, energy efficien-cy, urban transport, integrated water resource manage-ment and solid waste management. Under INFRA, the Bank is placing even greater emphasis on “greening” as an element of crisis response support. The level of lend-ing for energy efficiency and renewable energy reached US$1.3 billion in FY2009, up from US$34 million in FY2003. At the same time, the Bank has supported low carbon studies in seven IBRD countries—Brazil, China, India, Poland, Indonesia, Mexico and South Africa—to examine the additional costs and benefits of lower carbon growth and ways to finance such mea-sures.

Ô Sector Reforms. To enable more efficient and sus-tainable operation of existing infrastructure and bet-ter allocation of capital for new investments, IBRD infrastructure projects have helped advance critical institutional and policy reforms in member countries. In the power and water sectors, there has been greater focus on improving the performance of publicly owned utilities and on introducing forms of public private participation including leases, management contracts, and independent power producers with strengthened regulation. Development Policy Operations have ad-vanced policy and institutional reform for improved regulation, monitoring, transparency and participation in the infrastructure sectors. Initiatives such as Road Cost Knowledge System (ROCKS), the Construction Sector Transparency Initiative (CoST), the Gover-nance and Anti-Corruption in Infrastructure Advisory Program (“GAC Squad’ and the Extractive Industries Transparency Initiative (EITI) promote and support improved governance through greater transparency, accountability and participation in the infrastructure sectors.

Going Forward. SIAP and INFRA will guide WBG in-volvement in the infrastructure sectors through FY2011. IBRD will use a full range of instruments, including in-vestment loans, development policy loans, guarantees,

Figure 1. IBRD Lending for Infrastructure

0

14.0

12.0

10.0

8.0

6.0

4.0

2.0

FY00 FY01

AFR0.2

EAP2.9

SAR0.9

MNA1.2

LRC3.1

ECA4.5

FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09

a. By Sector, FY2000 – FY2009, $ Billion

b. By Region, FY2009, $ Billion


technical and advisory assistance to meet these objectives and will support reforms necessary for facilitating private sector participation and for improving the efficiency and effectiveness of infrastructure investments. Demand for infrastructure is expected to remain strong in IBRD coun-tries and a greater effort will be required to help countries bridge the access gap and achieve the Millennium Develop-ment Goals (MDGs), in addition to supporting economic

recovery, growth and development, and climate change mitigation and adaptation. Therefore, it will be critical that IBRD has sufficient resources to enable it to increase financial support to client countries, provide high quality knowledge and non-lending services and act as convener to improve harmonization and coordination among clients and development partners.

BOX 2

Regional Response to the Global Financial Crisis

Africa: although the region was largely shielded from the initial impacts of the global financial crisis, falling commod-ity prices, reduced private flows and a shrinking fiscal space have created a very difficult environment for infrastruc-ture investments in africa. responding quickly to the challenge, the World Bank increased its infrastructure lending from us$2.5billion in fY2008 to us$3.6 billion in fY2009 (of which us$200 million was from IBrD) and us$1.1 bil-lion in the first seven months of fY2010 (of which us$400 million was from IBrD). to help mitigate the crisis IBrD is supporting the Botswana Morupule B Generation and transmission Project with a us$136 million loan and us$243 in guarantees. However, as fiscal pressures mount due to the global financial crisis, redressing africa’s infrastructure shortfall is becoming ever more challenging.

East Asia and Pacific: Having undertaken structural and institutional reforms following the asian financial crisis in the nineties, economies in the region have been able to better respond to the latest shocks. to mitigate the impacts of the current crisis, many countries have adopted stimulus packages with significant infrastructure components. the Bank has helped countries in the region prioritize infrastructure investments by approving us$3.1 billion of infrastructure lending in fY2009 (of which us$2.9 billion was IBrD lending) and us$500 million in the first seven months of fY2010 (of which us$200 million is from IBrD). some notable programs include us$300 million for one of the first projects approved under china’s stimulus plan—the nanGuang railway Project—and us$100 million for the Indonesia Infrastructure finance facility Project, approved in June 2009.

Europe and Central Asia: after a decade of strong growth, the countries in europe and central asia were the hard-est hit by the financial crisis, as they experienced a sudden stop in capital inflows. they have been unable to imple-ment countercyclical macroeconomic policies, putting infrastructure investments in the region at risk. In response, the Bank stepped up its infrastructure lending for the region by approving us$5.0 billion for infrastructure sectors in the region in fY2009 (of which $4.5 billion was from IBrD) and us$ 1.1 billion in the first seven months of fY2010 (of which us$1.0 billion was IBrD). some key initiatives in the eca region included the us$2.1 billion Kazakhstan south West roads Project, which is being jointly implemented by asian Development Bank (aDB), european Bank for re-construction and Development (eBrD), Japan International cooperation agency (JIca), and Islamic Development Bank (IsDB) and will greatly improve regional transport linkages. What is more, cutting edge analysis and operational support is being provided in a number of areas including “greening” investment schemes, PPPs in transport, elec-tronic tolling, urban regeneration, and investments in hydrometeorology for climate adaptation. the us$500 million for turkey Private sector renewable energy and energy efficiency Project is being co-financed by us$100 million from the clean technology fund. additional financing instruments and new approaches for supporting infrastructure development, such as fee-for-service arrangements and sub-national financing, have been utilized. It is imperative that the Bank continue to maintain support for infrastructure development to help european and central asian coun-tries avoid growth-constraining shortfalls in the future.

(continued on next page)

IBrD resuLts 7

BOX 2 (continued)

Latin American and the Caribbean: Latin american and caribbean countries are relying greatly on stimulus pack-ages to respond to the crisis. Infrastructure investments are a central part of these stimulus plans. Governments in the region planned to invest an additional us$25 billion in 2009 in public works—about 20 percent beyond the original budget allocations. the Bank has supported governments in the region by committing us$3.2 billion for infrastructure in fY2009 (of which us$3.1billion was IBrD) and us$3.2 billion in fY2010 (almost all of which was IBrD), including us$450 million loan for third sustainable Development DPL and us$212 million for the second rio de Janeiro Mass transit Project.

Middle East and North Africa: Middle east and north africa countries face lower oil and tourism revenues, fewer remittances, and falling foreign direct investment as a result of the global crisis—all of which is likely to weaken eco-nomic performance. the Bank committed us$1.4 billion for infrastructure sectors in the region in fY2009 (of which us$1.2billion was IBrD) and us$41 million in the first seven months of fY2010 (all of which was IBrD), including us$600 million for the egypt ain sokhna Power Project.

South Asia: the growth outlook of south asia was nearly halved from a peak GDP growth rate of 9 percent in 2006 to nearly 5 percent in 2009. there has been tightening of credit markets as seen in portfolio outflows, decline in ex-ternal commercial borrowing, and an increase in credit spreads. this has created difficult conditions for undertaking large infrastructure investments. to mitigate the impact of the crisis on infrastructure sector, the Bank approved $2.0 billion for infrastructure in the region in fY2009 (of which us$900 million was IBrD) and us$3.0 billion in fY2010 (of which us$2.5 billion was IBrD), including us$1.2billion for the India Infrastructure finance company Limited and $1billion for the fifth Power system Development Project.

BOX 3

List of Important World Bank Group (WBG) Infrastructure Publications

WBG Sustainable Infrastructure Action Plan – FY 2009–2011, which supports a renewed commitment to client countries to improve the reach and quality of infrastructure service delivery in a sustainable manner through in-creased financial and analytical support and leverage. the strategy lays out how the WBG will address the core ac-cess agenda through attention to cross-cutting issues such as climate change, the role of the private sector, regional disparities in infrastructure service delivery, the rapidly growing demand for infrastructure in urbanizing economies, and the need to support and build upon technological advances. It calls for going beyond the traditional economic and financial sustainability of infrastructure services, to address the “triple bottom line.”

The World Development Report 2009, Reshaping Economic Geography, presents a cross-sector perspective of the spatial transformations needed for economic development. It considers the combination of “spatially blind” policies, connecting infrastructure investments, and geographically-targeted incentives necessary for balanced de-velopment in different types of countries and at different geographic scales.

the Energizing Climate-Friendly Development: World Bank Group Progress on Renewable Energy and Energy Efficiency summarizes the progress made at the WBG during 2008, and presents case studies and analyses from several noteworthy projects.

the report Reforming Power Markets in Developing Countries: What Have We Learned, prepared in 2006 pro-vides guidance on assessing the suitability of available options for public-private roles in the financing and provision of electricity in developing countries. It compiles the lessons of experience from the reforming power markets of

(continued on next page)


developing countries and transition economies. It focuses on reforms that address the generally poor performance of power markets in developing countries but also covers reforms in power markets that are performing reasonably well.

the WBG Hydropower Business Plan, Directions in Hydropower: Scaling up for Development, prepared in fY09, identifies a two-track approach to lending and sector strengthening to boost investments by promoting good practice, strengthening project planning, leveraging regional development and building partnerships through effec-tive communication and consultation. this business plan proposes to scale up investments to about us$1.3 billion per year to help meet the climate change challenge and mitigate high oil costs in support of the poverty reduction agenda in key regions, such as africa and south asia.

the paper on Water and Climate Change: Understanding the Risks and Making Climate Smart Investment Decision prepare d in 2009 provides an evaluation of the exposure of the World Bank water sector investments to future climate change. the paper presents a common platform for climate change projections and methodology for assessment of the vulnerability of water systems to hydrologic changes. It also includes a menu of adaptation op-tions for increased robustness and resilience of water systems to climate variability.

the 2009 World Bank report on Freight Transport for Development addresses the need for greater engagement by improving knowledge of how these markets function so that transport infrastructure projects are adequately linked to corresponding efforts to make transport services responsive to people’s needs.

the 2009 report, Transport Prices and Costs in Africa: A Review of the Main International Corridors that ana-lyzes the various reasons for poor transport performance seen widely throughout africa and provides a compelling case for a number of national and regional reforms that are vital to the effort to address the underlying causes of high transport prices and costs and service unpredictability seen in africa.

the 2009 flagship report, Information and Communications for Development, illustrates the new opportunities offered by mobile, broadband, It-based services and various Ict applications. the report also features at-a-glance tables for 150 economies of the latest available data on Ict sector performance.

three sourcebooks on Deterring Corruption and Improving Governance in the electricity sector, the urban Water supply and sanitation sector and the roads construction and Maintenance sector serve as resources to sector practitioners to assess the extent and risks of corruption in the sector and to improve governance in ways that re-duce corruption.

BOX 3 (continued)

IBrD resuLts 9

energy

The number of people without access to electricity in 2008 was estimated to be 1.5 billion—or 22 percent of the world’s population. The world economy is set to grow four-fold by 2050 and, absent transformational changes, both energy de-mand and energy-related carbon dioxide (CO2) emissions are expected to more than double. The poor in developing countries are expected to bear the brunt of the change in the global climate. Against this backdrop, IBRD is helping countries gain access to reliable and adequate energy sup-ply by embedding sustainability at the core of energy sector programs through focus on the “triple bottom line”: eco-nomic/financial; environmental; and social sustainability-based on a platform of strong governance. IBRD works across the spectrum of subsectors, including energy effi-ciency and renewable energy to meet future energy needs in a sustainable manner (see Figure 2 for subsector breakdown of FY2009 IBRD lending). The World Bank’s 2001 Ener-gy Strategy targeted an increase in global electricity access from 65 percent to 75 percent in ten years. This target has been exceeded with 78 percent of households worldwide having attained access to electricity by 2008.1

Leverage

IBRD’s investment and guarantees have played a critical role, often in coordination with IFC and MIGA in leverag-ing both public and private investment. In FY2009, for in-

stance, the total cost of energy projects partially financed by IBRD was about US$7.3 billion, of which IBRD contrib-uted US$3.8 billion. IBRD thus leveraged as much funds as it committed. While much of the investment that was lever-aged was from the public sector (recipient governments and donor co-financing), the private sector also contributed sig-nificantly to IBRD projects. For example, the US$137 mil-lion Morupule B Generation and Transmission Project in Botswana that was approved in FY2010 leverages US$825 million in funds from the private sector, US$204 million in funds from development partners and US$498 million in financing from the government.

Access

Despite the importance of energy for improving lives, (Fig-ure 3), access to modern energy services has continued to be an issue for the poor in IBRD countries2 (See Table 1).

IBRD investments have enabled access to modern energy services for millions of people in IBRD countries. Millions of people gained access to electricity as a result of recent IBRD energy projects3 (see Table 2 for energy access proj-ects approved between FY2000-FY2008).

World Bank rural electrification projects from 1980 to 2006 brought electricity to more than 130,000 villages, reaching

Figure 2. IBRD Investment for Energy Projects by Type (FY09, $ Million)

ThermalGeneration$600mm

Transmission andDistribution,

$423mm

Other Energy,$1,051mm Oil, Gas and Coal,

$160mm

New RE,$473mm

Energy Efficiency,$821mm

LargeHydro,$40mm

Table 1 electrification rates in selected IBrD and Blend countries

CountryElectrification

Rates (percent)

Population without Electricity

(million)

Indonesia 54 101

Philippines 81 16

India 56 487

Pakistan 54 71

Brazil 97 7.0

Colombia 86 6.0

Peru 72 8.0

Morocco 85 5.0

Source: IEA 2006


at least 20 million households, supplied more than 600,000 kilometers (km) of new lines, and installed more than 50 substations.4, 5 More than one million Solar Photovoltaic (PV) systems have been installed, benefitting millions of people (Table 4).

For instance, in Indonesia, IBRD made a substantial contri-bution to increasing rural electrification coverage through a series of dedicated projects. Between 1991 and 2000, IBRD

projects brought electricity to more than 10 million house-holds; the Bank’s support of a “time slice” of the Indonesian program means that IBRD finance paid for about half of all the new connections in this period6.

In Ceara, Brazil, more than 1,500 rural communities with 91,000 families were electrified through a multi-sector IBRD Community Driven Development project. As part of the project, communities were directly involved in select-ing, preparing, and overseeing the implementation of elec-trification subprojects (Table 4)7.

In Peru, an IBRD Rural Electrification Project used more cost effective criteria for the selection of communities, re-sulting in 150,000 households benefiting from the project instead of 100,000 that would have benefited using the ex-isting criteria.8

Economic Growth and Regional Integration

Inadequate and unreliable electricity supply affects many IBRD countries, leading to lower enterprise productivity, competitiveness, and employment, and a severe constraint on economic activity and growth9 (see table 3 for losses

Figure 3. Relationship between human development and energy consumption 1990–2000, selected countries

0.85

0.75

0.65

0.55

0.45

0.350 500 1,000 1,500 2,000 2,500H

uman

Dev

elop

men

t Ind

ex (H

DI)

Per Capita Energy Consumption (kgoe/capita)

Ghana

Senegal

Nepal

Morocco

DominicanRepublic

Chile

China

Malaysia

Table 2 recent IBrD energy access Projects, fY2000-fY2008

Fiscal year Country Project Name# of households reached

2000–2006 Mexico Alternative Energy 200,000

2001 (Ongoing) Brazil Bahia Rural Poverty Reduction Project 250,000

2002–2006 Brazil Sergipe Rural Poverty Reduction 73,867

2002–2008 Ecuador Power & Community Sector Modernization & Rural Services

2200

2003 (Ongoing) Bolivia Decent Infrastructure for Rural Transformation 16,000

2004 (Ongoing) Philippines Rural Power Project 2000

2006 (Ongoing) Peru Rural Electrification 160,000

2006–2009 Brazil Rural Poverty Reduction 93,000

2007 (Ongoing) Pacific Islands GEF Sustainable Energy Finance 21,500

2008 (Ongoing) Azerbaijan Rural Investment 116,667

2008 (Ongoing) Mexico Integrated Energy Services 50,000

Source: World Bank 2009a

IBrD resuLts 11

due to power outages in selected IBRD countries). IBRD is helping member countries secure sufficient energy for fueling their economic growth by providing new and ad-ditional international financing to meet incremental costs, non-financial risks, and institutional and technical capacity needs associated with the power sector, including genera-tion and transmission investments and cross-border energy trade through regional integration (Table 1). For instance, IBRD-supported projects completed between 2007 and 2010 helped install and rehabilitate at least 15,000 MW of power generation capacity in member countries.10

In India, IBRD has been actively involved in the reform and development of the transmission sector through the creation and strengthening of the Power Grid Corporation. Through a series of five loans since 1993, IBRD has helped enhance the country’s power transmission capacity and enabled power to be transmitted across regions and states. During this period, the company has nearly tripled its trans-mission network, its assets have grown more than ten-fold to about US$9 billion, and revenues have increased more than eight times to US$1.3 billion. Today, Power Grid is the world’s third-largest transmission utility.

In Egypt, IBRD is assisting the Egyptian government boost sustainable energy supply through investment in 700 MW of new generation capacity under the El-Tebbin Power Proj-ect, approved in 2006. The project also aims at helping the government strengthen the performance of the power sec-tor by engaging in policy dialogue and supporting measures aimed at improving financial performance and energy effi-ciency. It will also contribute to the development of the legal framework for the power sector, future gas and electricity pricing and further implementation of recent reforms.

In South Eastern Europe, IBRD has provided assistance to countries for developing a regional energy market to im-prove the balance between energy supply and demand. In January 2005, the Bank approved a US$1 billion Adaptable Program Loan (APL) facility to support the development of the energy community in the region. In a short time, many countries in the region that have gotten on track with reforms, including Romania, Turkey, Albania, Serbia, Bos-nia and Herzegovina, FYR Macedonia, and Montenegro, which have all accessed the APL facility to support elec-tricity transmission, generation and distribution projects. IBRD assistance has helped put a regional energy market in place in South East Europe in a relatively short time.

In Central America, IBRD has supported reform and ca-pacity building efforts associated with SIEPAC (Sistema de Interconexion Electrica para America Central or Central American Electrical Interconnection System), a planned interconnection of the power grids of six Central Ameri-can nations. The proposed project entails the construction of transmission lines connecting 37 million consumers in Panama, Costa Rica, Honduras, Nicaragua, El Salvador, and Guatemala and is expected to achieve several goals: allevi-ate periodic power shortages in the region; reduce operating costs; optimize shared use of hydroelectric power; create a competitive energy market in the region; and attract foreign investment in power generation and transmission systems.

Climate Change/Environment

IBRD is a major financier of energy efficiency, renewable energy and large hydropower projects. In the 2004 Bonn International Conference, WBG committed to boost en-ergy efficiency and new renewable energy projects (com-

Table 3 Values Lost due to Power Outages as a percentage of sales

Country

Number of Power Outages

in a Typical Month

Average Duration of Power Outages (hours)

Value Lost Due to Power Outages (percent of Sales)

China — — 1.3

Colombia 1.0 2.6 2.3

Egypt 1.1 2.1 3.4

India — 3.7 6.6

Indonesia — — 3.3

Morocco 2.5 1.8 1.3

Pakistan 34.1 2.3 9.9

Kazakhstan 5.2 6.0 3.7

Turkey 5.7 4.5 2.8

Source: IFC 2009


prising energy from solar, wind, biomass, and geothermal, as well as hydropower from facilities smaller than 10 mega-watts) by 20 percent a year (see Table 4). The target was met with a comfortable margin in the following three years. The level of lending for energy efficiency and renewable energy reached US$1.3 billion in FY2009 from US$34 million in FY2003 (see Figure 4). Furthermore, IBRD leveraged sig-nificant amount of funds from the other development part-ners and the private sector for renewable energy and energy efficiency projects. For instance, the US$500 million Pri-vate Sector Renewable Energy and Energy Efficiency Proj-ect approved in 2009 leveraged US$550 million from the private sector and US$100 million from development part-ners. IBRD investment contributed to the achievement of the two ten-year targets laid out in the World Bank’s 2001 Energy Strategy: (i) reduction of global average CO2 inten-sity of energy consumption to 2.75 per ton of oil equivalent (toe); and (ii) decrease in average energy consumption per unit of GDP to 0.24/toe/US$1000.11

In China, the IBRD-financed Renewable Energy Develop-ment Project supported the development of off-grid solar

power systems since 1999 for up to 400,000 rural families in the Northwestern provinces. It helped Chinese producers of photovoltaic (PV) systems meet high standards and compete on international markets (see IBRD Project Profile). Today, China is the largest exporter of solar panels in the world.

In 2005, an IBRD project provided technical assistance and financing to set up 21MW of wind generation capacity, on

Figure 4. IBRD Lending for Renewable Energy and Energy Efficiency (US$ Million)

0

1,600

1,400

1,200

1,000

800

600

400

200

2003 2004 2005 2006 2007 2008 2009

Energy Efficiency Large Hydro New RE

Table 4 solar PV Initiatives in IBrD countries

Country ProjectTarget number of

systemsSolar PV Capacity

(kWp)Total Cost (US$

millions)

Argentina Renewable Energy in the Rural Market

30,000 2,843 36

Bolivia Decentralized Energy, ICT for Rural Transformation

60,000 2,600 38

China Renewable Energy Development

400,000 10,000 145

India Renewable Resources Development

45,000 2,500 24

Indonesia Solar Home Systems 8,500 425 4

Mexico Renewable Energy for Agriculture and Rural Electrification

8,345 1,767 28

Philippines Rural Power and IFC 1 MW grid-tied Project

135,000 10,000 120

Papua New Guinea Teachers Solar Lighting 2,500 100 2

Source: Anil Cabraal, 21st European Solar Photovoltaics and Solar Energy Conference, Dresden, Germany, Sep 2006 (with data updated Nov 2, 2007).

IBrD resuLts 13

two sites in China, helping catalyze the expansion of wind power in China. By the end of 2008, wind capacity installed in China had reached 10GW and generation about 103 tera watt hour (TWh), and China had the fourth largest installed capacity in the world, accounting for about ten percent of the total.

On the energy efficiency front, IBRD financing was used to introduce the Energy Service Company (ESCO) concept. Three ESCOs were established in 1998 in Shandong, Lia-oning, and Beijing by the US$151 million IBRD-supported China Energy Conservation Project. By 2007, the ESCO industry in China has grown to over 400 companies, with a combined annual investment of more than US$1 billion, which saved over 52 million tons of coal equivalent (tce).

In Turkey, IBRD is helping the government develop clean energy from domestic renewable resources such as wind, hy-dro, biomass and solar, and is also concentrating on improv-ing energy efficiency, primarily in industry and buildings (see IBRD Project Profile). Currently, fewer than 25 wind farms (including one financed by the World Bank) produce about 500 megawatts of electricity a year. The project will help the government expand wind energy toward its target of 20,000 MW by 2020—an amount that would meet al-most half of Turkey’s present energy needs.

In India, IBRD is helping the government move away from its reliance on coal towards untapped renewable and hydro-power resources. The Government of India is targeting an increasing the portion of hydropower in its power system mix to 40 percent from 26 percent. Accordingly, the Koyna IV and Nathpa Jhakri projects which were completed in 1998 and 2002 respectively, and two more projects, the Rampur Hydropower Project and Vishnugad Piapakoti Hydropower Project are under consideration (see IBRD Country Profile for India).

In Ukraine, the Kyiv Public Buildings Energy Efficiency Project helped improve the level of energy efficiency in administrative and public buildings by 17 percent higher between 2000 and 2005. Activities within the Project have also had a substantial impact on the creation of a market for energy conservation service providers in the capital and beyond.

Power Sector Reforms

In the 1990s, power sector reforms—addressing market structure, competition, private participation and regulatory frameworks—advanced in developed countries as well as middle-income countries in Latin America and Eastern Eu-rope. Countries that undertook ambitious reforms tended to experience large private investment flows, marked im-provement in efficiency and operational performance of utilities, and improved service to consumers. It was hoped that success with these models in these countries would sug-gest the approach could be adapted by other nations world-wide.

However, attempts to apply reform models based on sub-stantial market restructuring in large middle-income IBRD countries—as well IDA countries—with limited econom-ic and institutional capacity have shown mixed results. A 2003 IEG review of the WBG’s experience in supporting private participation in the power sector in the 1990s found that good outcomes could be obtained only where there was client ownership and a sustained political commitment to private sector development.

In recent years there has been a sharper focus on improv-ing the performance of publicly-owned utilities and on in-troducing forms of public-private participation including leases, management contracts, and independent power pro-ducers. A range of lending instruments have been used to address power sector reforms, including sector investment loans, policy loans and technical advisory services. Bank programs such as the Extractive Industry Transparency Ini-tiative (EITI) have been working to improve governance in resource-rich countries through the full publication and verification of company payments and government revenues from oil, gas, and mining. In Morocco, IBRD-supported reforms have focussed on efforts to enhance the country’s energy security through the development of domestic re-newable energy, liberalization of the country’s petroleum and power sectors, and reduction of the government’s bud-getary subsidies for petroleum products while protecting low-income consumers.

In Turkey, reform efforts are focusing on maintaining elec-tricity supply security in an environmentally-sustainable


manner; establishing enabling conditions for attracting enhanced private investments; and improving energy effi-ciency in the supply and consumption of electricity. With IBRD support, Turkey has succeeded in implementing a wholesale electricity market. The competitive market es-tablished in 2006 now accounts for about 20 percent of total electricity consumption. Retail competition has also grown—currently nearly 50 percent of consumers can now choose their electricity supplier. Over the last six years, elec-tricity transmission capacity in Turkey increased from 102 terra-watts-hour to more than 164 tWh.

In Mexico, IBRD is helping the government: implement a verifiable, targeted, and cross-sector strategy for reduced emissions; establish institutions, regulations and moni-

toring capacity to allow for the reduction of emissions in energy generation; and institutionalize the appropriate financing mechanisms to allow for the reduction of emis-sions in, urban transport, energy generation and efficiency.

In Lebanon, IBRD is putting a particular emphasis on ini-tiating administrative reform of the state-owned enterprise Electricite Du Liban (EdL) to achieve service reliability, cost reductions, and to relieve the government budget of a massive drain of resources that could be much better allocated else-where. The reform steps center on administrative reform of EdL and high priority investments to reduce cost and improve service. The administrative reform will focus on corporatizing and unbundling EdL (into separate generation, transmission, and distribution operations) and ultimately privatizing it.

Energy Sector Management Assistance Program

the energy sector Management assistance Program (esMaP) is a global knowledge and technical assistance partnership administered by the World Bank and sponsored by bilateral official donors since 1983. esMaP fol-lows a three-pronged approach to achieve its mission: think tank or horizon scanning, operational leveraging, and knowledge clearinghouse functions. esMaP focuses on three global thematic energy challenges: expanding energy access for poverty reduction, enhancing energy efficiency for energy secure economic growth, and deploying re-newable energy systems for a low-carbon global economy. some highlights of esMaP support to IBrD countries include:

• Energy Efficient Cities Initiative to help countries build institutional capacity at the city level to explore and deploy innovative, energy efficient solutions for the delivery of basic energy services.

• Renewable Energy Market Transformation Initiative to help countries build their institutional capacity to develop, plan and implement strategies to quickly deploy select renewable energy technologies—chiefly solar, geothermal, wind, and small hydroelectric power.

• Low Carbon Growth Country Studies to help seven IBrD countries—Brazil, china, India, Poland, Indone-sia, Mexico and south africa—examine the additional costs and benefits of lower carbon growth and ways to finance such measures.

IBrD resuLts 15

transport

Transport is crucial for economic growth and trade, both of which are highly dependent on the conveyance of people and goods. Virtually no production can take place unless inputs such as raw materials, labor, and fuel can be moved from different locations; neither can manufactured prod-ucts be delivered to consumers, nor a wide variety of ser-vices carried out. It also vital for achieving the MDG’s by providing accessibility to health care, education, jobs, and markets for the poor.

So it is not surprising that transport accounts for the largest share of IBRD lending. Cumulative IBRD investments for FY2007–2009 were US$11.6 billion or 19 percent of total IBRD Commitments, with Europe and Central Asia and East Asia and Pacific regions accounting for the largest shares of net commitments (37 percent and 29 percent, respective-ly) between FY2007-FY2009, followed by Latin America and Caribbean (21 percent). These investments have also shown significant impact. In the last five years, 92 percent of transport projects financed by IBRD had outcomes rated satisfactory by the Independent Evaluation Group.

Historically, transport assistance through IBRD concen-trated heavily on construction of roads and highways. Over 40,000 km of roads were constructed or rehabilitated and another 40,000 km were repaired or maintained in projects that were completed in the last four years, bringing benefits in terms of access to jobs, markets and social services and facilitating extension of other infrastructure services.

The World Bank’s recent Transport Business Strategy for 2008–2012 stresses the need for transport to be “Safe, Clean, and Affordable.” Following this, there is an empha-sis on the development of more sustainable systems such as urban mass transit—especially bus and non-motorized transport—and on reducing the external costs of transport in the spheres of environment and health. The portfolio is now more diversified in urban, rail, maritime and air trans-port, and projects aiming to improve trade competiveness through transport reform and investments. Share of lend-ing in roads, as a percentage of total transport lending, has decreased from 83 percent in 2006 to 66 percent in 2009 (Figure 5).

Access

Basic mobility plays a critical role in delivering and pro-viding access to health care and education. Most programs that directly target these goals (programs involving schools, health clinics, emergency services, nutrition programs, and social services) depend on transport (motorized and non-motorized) to underpin their delivery. Hence, accessibility to basic services is a priority area for IBRD lending in trans-port.

Rural Access. Studies have shown significant develop-ment impacts of investments in rural roads (refer to Box 4 for measurement of rural access index for different IBRD countries). Provision of rural access facilitates opportunities in water and energy provision and access to economic ac-tivity through markets and often it is found that local gov-

Figure 5. IBRD Investments for Transport ($ Million): Distribution by Transport Mode

Aviation, 2

Roads &highways, 393

Railways,881

Gen. transportsector, 459

Ports/water/shipping, 177

Pub.admin-

transport,139


ernments and communities tend to prioritize rural roads within rural development projects.

In Morocco, girls’ enrollment in education more than tri-pled within a few years of a rural roads project’s comple-tion. Women’s daily burden of collecting firewood was dramatically reduced as paved roads increased the afford-ability of butane for heating water for cooking and washing clothes.12

In Colombia, an improvement of rural roads in areas previ-ously inaccessible to vehicles reduced travel times and trans-port costs by 80 percent. Farmers responded by increasing production of goods for market (particularly perishables) by between 50 percent in one area to 200 percent for some products in others.13

In Peru, the IBRD has supported the Rural Roads Pro-gram in collaboration with Inter-American Development Bank (IADB) to upgrade the condition of the rural road network. This program improved rural transport services to over 3.5 million rural Peruvians, resulting in reduced travel time and cost, increased access to social services like schools and health centers, and improved economic opportunities, with impact evaluations showing a significant reduction of poverty in the poorest, most remote communities.

Urban Access. Much of the growth in the world’s popula-tion for the foreseeable future will be in cities and towns of the developing world. With growing urbanization rates it is expected that many IBRD countries will become more ur-ban than rural in the next 20 years. IBRD has been focusing on urban transport projects to improve the integration be-

BOX 4

Measuring Results.

the rural access index for roads measures the percentage of rural population that lives within 2 kilometers (typically equivalent to a walk of 20–25 minutes) of an all-season road. In 72 of the IBrD and Blend countries for which the data has been calculated, about 71 percent of the rural population had access to an all season road. this still leaves out about 544 million people in rural areas who do not have access to an all-season road in these countries. the range for the rural access indicator, however, is very large from nearly 98 percent in china and Hungary to 31 percent in albania. although time series data are limited, there is evidence that rural access index has improved over time in countries supported by IBrD.

comparable measures are being established to determine the level of ‘urban mobility’ and to gauge transport costs as a measure of affordability. the former will become relevant as the number of poor people in urban areas in middle-income countries grows.

rural access Index (regional Values for IBrD and Blend (IBrD+IDa) countries)

Region AfricaEast Asia/

Pacific

Europe/ Central

Asia

Latin America/

Caribbean

Middle East/ North

Africa South Asia Total

Rural Access Index (percent)

64 percent 78 percent 77 percent 69 percent 63 percent 61 percent 71 percent

Countries covered (Number)

6 9 20 25 10 2 72

Source: Household Survey; Bank staff calculationsNote: Values of the Rural Access Index continue to be updated

IBrD resuLts 17

tween urban services and to increase access of urban poor to employment centers, health centers, and education facilities.

IBRD has supported Colombia’s Urban Transport Pro-gram, which implement locally-executed Bus Rapid Transit (BRT) systems and strengthen the urban transport institu-tional setting. As a result the system (Transmilenio) carries close to 1,400,000 passengers per day—approximately 27 percent of Bogotá’s public transport demand. Low-income passengers account for 70 percent of the number of passen-gers. Travel times have been reduced by around one third. More than 2,000 highly polluted buses have also been eliminated from the street and accidents in Transmilenio corridors have declined by 90 percent. Overall Bogotá has been transformed by this internationally-recognized Trans-milenio rapid bus transit system, which provides for safer and quicker commutes for mostly lower-income residents and a much healthier urban environment.

In India, IBRD is supporting the Mumbai Urban transport Project which aims to improve rail and road transporta-tion in the traffic-choked mega-city of Mumbai. So far improvements have been made in the rail system resulting in reduced travel time for rail passengers by five minutes in average. Over 400 new buses have been pressed into ser-vice by BEST, the city’s transport authority, and more than two-thirds of Phase I of the Jogeshwari-Vikhroli Link Road is complete; work is in progress on Phase I and II of the Santacruz-Chembur Link Road and six pedestrian under-passes. This is expected to significantly reduce travel time on the East-West road links and improve traffic safety for pedestrians.

Economic growth and regional integration

IBRD lending for transport focuses on facilitating eco-nomic growth and regional integration through national and international trade. Roads often carry a large number of passengers and freight ton-km in a country, close to 90 percent of international trade’s volume is carried by wa-terborne transport and around 35 percent in value by air transport. High transport costs magnify the impact of dis-tance and reduce trading opportunities, while good freight services can make traded goods more affordable and help developing countries to build more complex supply chains

that facilitate trade. Furthermore, a reduction in transport costs for traded goods can give producers more disposable income.

Roads/Highways. Roads and highways are the predominant form of land transport in virtually all countries, frequently carrying more than 80 percent of passenger kilometers and a significant percentage of freight-ton kilometers. The ma-jority of IBRD lending also focuses on roads and highways, with an average yearly commitment of US$1.7 billion since 2000. Projects completed in the last four years have built or rehabilitated over 40,000 km of roads and repaired or maintained another 40,000 km of roads.

Construction of roads cannot be considered in isolation from the management of the main road network and the rest of transport sector. National transport issues such as road safety, road maintenance, and the availability and cost of transport services need to be addressed along with the provision of roads (see box 5 to learn more about Bank’s work in road safety). Regional and social development poli-cies also impact outcomes of road projects.

The Second Road Transport project in Nicaragua helped restore over 3,000 km of road network and reopen land transport connections after a natural disaster in a cost-effective and sustainable manner. The most important achievement of this project was in restoring secondary and rural roads that had been damaged by hurricane Mitch. Over 3,000 kilometers of these roads were re-opened for transport, thus allowing rural residents to obtain access to jobs, mar-kets, schools, health facilities and other vital services.


IBRD financed Gujarat State Highway Project in India to maintain and improve high priority state highways and it re-sulted in a reduced travel time by 10 percent on about 1,900 km of roads improved and maintained under the project. Average car/truck/bus speed on the completed roads rose from 50 km/h pre-project to 60 km/h and the maintenance funding increased by 10 percent annually.

The China road program has supported the development of the National Trunk Highway System. Since 1990, IBRD loans have led to the construction of some 41,000 km of high grade highways which have greatly improved transport links between the provinces. At the same time as construct-ing expressways, each project also had components which improved local roads and strengthened institutions.

Other modes of transport. The developmental role of rail-ways and maritime transport remain important, particu-larly for long-distance transport of general freight. IBRD lending for railway projects has significantly increased over the past few years. The total lending for rail projects in 2009 was US$881 million, up from US$258 million in 2005; commitments in the port sector were US$178 million in 2010. Air transport also has become a vital form of shipping

for high-valued items that need to come to market quickly, such as agricultural products subject to spoilage. From hav-ing virtually no lending in FY2006, IBRD lending for air transport increased to US$49 million in FY2008.

In China, IBRD is supporting a series of projects in rail-ways. One of these projects is the Third National Rail Project, which will help to meet the growing demand for transport of people and goods between Guizhou and Yun-nan provinces. The project includes realignment of 254 km of existing track and construction of a second track, and to design standards that will allow operation of double-stack container trains. The upgraded facilities are expected to de-crease travel time to 4.5 hours from 10 hours and reduce costs of international container transport between inland centers and ports.

In Croatia, IBRD is supporting the Rijeka Port Gateway program to increase trade competitiveness by improving the international transport chain through the Rijeka Gateway for both freight and passenger traffic. It aims to modernize the port and road network connections, and privatize port operations.

In Egypt, IBRD is supporting the Airport Development Project (approved in FY2009) which is expected to pro-mote growth and employment by eliminating capacity con-straints on the growth of traffic, particularly for tourism and associated foreign exchange earnings; raise the service qual-ity of the Cairo International Airport and Sharm El Sheikh Airport to international best-practice standards; and pro-mote efficient private participation in airport management and airport service delivery in a more competitive market.

Regional Integration and Trade. In Bulgaria, IBRD sup-ported a trade and transport facilitation project in South East Europe. This addressed the long delays that were oc-curring at road border crossings throughout South East Eu-rope, impeding trade and development in the region. Over the first three years the project had recorded an average 63 percent reduction in customs clearance times, combined with a 60 percent increase in customs revenue collected, plus a 65 percent reduction in border crossing times. Based on this demonstrated success, a second project is being pre-pared to cover railway and river transport in the region.

BOX 5

Road Safety

the Global road safety facility has been established by the World Bank to generate increased funding and technical assistance to strengthen global, regional and country safety management capacity in low and middle-income countries. Its goals are to catalyze increased levels of road safety investment, acceler-ate safety knowledge transfer, and promote innova-tive infrastructure solutions in the countries, given the urgency of the growing public health crisis arising from deaths and injuries on their roads. By 2015 road crashes are projected to become globally the biggest cause of health losses for children aged 5–14 years and by 2030 the second biggest cause of health loss-es for men. the poor will bear the bulk of this burden. IBrD is now supporting a number of projects with a road safety component that have been showing posi-tive results.

IBrD resuLts 19

This emphasis on measuring corridor performance is be-ing adapted in the development of new corridor trade and transport facilitation projects in the Eastern Europe and Central Asia region.

In Mexico, the Federal Roads Modernization Project (FRMP) was financed by IBRD to help meet the expected traffic growth on the federal road network and to reduce road transport system cost. The project repaired 1,100 ki-lometers of highway and 45 bridges, while also carrying out periodic and routine maintenance on 78,000 kilometers of highway. This helped decrease vehicle operating costs and reduce highway fatalities, and created better conditions to absorb the traffic increases from expanding trade in the North American Free Trade Area.

Environment

IBRD is helping countries address growing concerns about climate change through transport projects that aim to reduce greenhouse gas (GHG) emissions. Vehicles account for 15 percent of global GHG emissions and rising urbanization and motorization in developing countries will lead to an in-crease in vehicle fleet and emissions. The new Bank transport strategy recognizes this need and emphasizes investments in ‘clean transport’. There are many projects in the pipeline focusing on green transport issues, and positive results are expected to come out once they are completed. For example, a Bank project in Sao Paulo, Brazil, was created to link the existing suburban rail and metro systems used by over 3.5 million mainly low-income passengers, resulting in increased ridership, lower transport costs, and reduced air pollution.

In China, IBRD has supported the Urumqi Urban Trans-port Improvement Project to develop a multi-modal urban transport system. This resulted in increased cross-town travel speeds on key corridors, and has increased the share of public transport as a mode of motorized trips from 65 percent to 68 percent. This in turn led to lower private ve-hicle use and reduced congestion. The project also resulted in a reduced number of traffic accidents from 1,148 per year to 776 per year.

The Bank is increasingly engaged with cross-sector op-erations to exploit linkages between transport and devel-

opment challenges in the energy sector. For instance, a Bank-financed energy-efficiency transport study for Thai-land found that energy consumption in the transport sec-tor could be reduced by one third by 2025 if it adopts better vehicle standards, reform and investments in the rail sector, and improved urban bus services and pricing measures, amongst other measures.

Another area where the linkages between transport and energy sector development challenges are being exploited is through the Clean Technology Fund (CTF) operations that seek the deployment and transfer of low carbon pro-grams and projects with a significant potential for long-term green house gas emissions. Egypt’s and Mexico’s CTF investment plans have both identified investments to un-dertake shifts toward mass transport systems and fuel-effi-cient vehicles. Switching fuels to natural gas and the use of electrified trains are among the solutions identified in the investment programs, where potential emission reductions have been quantified in the order of 2.5Mt CO2e/year and 2Mt CO2e/year for Mexico and Egypt respectively.

Sector Reforms – Governance

Governance and anti-corruption are issues receiving in-creased attention in the transport sector, which is particu-larly vulnerable in these areas due to the nature of projects. Corruption in contracting and procurement negatively impacts safety and increases transport costs. Improve-ments in governance can lead to reduced costs, more ef-fective safety and environmental regulation, safer driving, safer vehicles, reduced noxious exhaust emissions, and


reduced vehicle overloading that damages roads. IBRD is undertaking several measures to address these challenges. Since 1999, the Bank has developed a Road Cost Knowl-edge System (ROCKS) to monitor and benchmark bank-financed road and highway project costs. Updating and deeper analysis of the data are being undertaken to find correlations between costs and quality of governance in project procurement. This analysis will help to improve strategies already being applied in a number of countries to mitigate the risk of corruption.

The Construction Sector Transparency Initiative (CoST) is an international multi-stakeholder initiative designed to in-crease transparency and accountability in the construction sector, which aims to increase transparency by disclosing “material project” information to the public and increase the value for money of public construction projects. En-hanced transparency in the construction sector will help to deter a range of poor practices—some of which may be the result of corrupt activity—and will support and comple-ment other initiatives to improve public sector financial management and tackle corruption.

The Governance and Anti-Corruption in Infrastructure Advisory Program (“GAC Squad’) supports wide adop-tion of governance and anti-corruption in infrastructure operations through a combination of hands-on learning-by-doing and knowledge dissemination gained through project assignments for broader use. Operational support in the transport sector includes development of quality as-sessment process for road maintenance and construction

works, field testing the Transport Governance Filter, and development and implementation of performance moni-toring systems for road projects by government regulators and civil society groups.

Operations in the transport sector are effectively using measures to address governance weaknesses in the design of projects. In Indonesia, the Bali Urban Infrastructure Project successfully identified and implemented several governance and anti-corruption measures leading to posi-tive impact. Specific measures included were establishment of a baseline unit cost in the region, post qualification pro-cedures for all, effective complaint handling system, strict measures on disqualification of lowest bidders and civil society engagement. Savings resulting from these measures enabled constructing an additional 22 km of a new Nation-al Highway and 15 km of urban drainage.

The Philippines program for the National Roads Improve-ment and Management embedded anticorruption mea-sures in the various project components and introduced safeguards to deal with collusion and bid-rigging. Specific measures include the computerization of procurement and contract management systems, upgrading of the civil works registry for processing of qualification information, a par-allel independent procurement evaluation, the enhanced procurement controls to ensure the reliability of contract cost estimates; detection of over-pricing through bid analy-sis, enhancement of supervision control over contract varia-tions, and dissemination of complaints mechanisms in bid documents.

IBrD resuLts 21

Water

Water is a key driver of growth and poverty reduction and is an input to almost all production in agriculture, urban de-velopment, industry and energy. Yet the availability of water is highly variable in both time and space. Managing water resources in a sustainable manner is a complex development challenge. The World Bank plays a unique development role in the water sector: it is the largest external financier in water supply and sanitation, irrigation and drainage, river basin management, trans-boundary water programs, and other water-related sectors, and provides strong advisory and analytical support to developing countries with over US$17 billion in IBRD commitments over the past decade. For the five years ended FY2008, IBRD financing to the water sector increased by 73 percent. Increasingly, water projects and advisory services are shifting away from narrow focus on single subsector to more integrated approaches to water management. As lending has increased, the quality of the water portfolio has improved (87 percent satisfactory), with impressive results.

IBRD financing for water projects leverages about 1.5 times additional co-financing from other development agencies, the private sector, and some beneficiaries, as well as central and sub-national government clients.14 In addition, parallel financing is often provided by development partners.

Access to water supply and sanitation

Though much progress has been made in expanding water supply and sanitation in IBRD and IBRD/IDA blend coun-tries, over 1.6 billion people remain without access to im-proved sanitation and close to 500 million without access to safe water supply in these countries.15 The bulk of IBRD financing to the water sector supports increased access to water supply and sanitation services, improvements in ser-vice levels, sustainability, water quality and pollution reduc-tion. Bank-financed water supply and sanitation projects in IBRD and blend countries, which closed between 2000 and 2008, financed access to water for more than 20 million people, sanitation to close to 10 million, and have upgraded service to at least another 6 million. These figures actually underestimate the scope of improved access resulting from IBRD-financed projects, many of which have enabled many

more people to gain access over time by supporting improved sustainability of service providers and expanding water pro-duction, transmission and storage facilities and wastewater treatment and collection facilities. Bank projects typically measure only access financed directly by the project during the project implementation period, not connections even-tually financed by households, service providers and others.

Lack of water supply and sanitation accounts for 5.5 percent of death and illness in high mortality developing countries. This puts it third place in mortality rates after malnutrition and infections and diseases from unsafe sex.16 Decreased ill-ness means children miss fewer school days.

The livelihoods of the poorest are critically associated with access to water services. Access to nearby water sources frees

Figure 6. FY2009 IBRD lending for Water Sector, $ Million

Watersupply, 411

Irrigation &drainage, 232

Hydro, 215

Sewerage,1064

Sanitation, 6

Pub. admin-wss/fld, 218

Gen. wat/san/fld

sect, 1651

Floodprotection, 138


up time collecting water. A review of communities with im-proved water supply in Morocco shows that school atten-dance increased by 20 percent over four years by lowering time spent on collecting water. Having separate sanitation fa-cilities for girls in schools increases girls’ school attendance.17

Under small-scale water supply projects included in the Ba-hia Rural Poverty Reduction Project in Brazil, households report a 37 percent reduction in time spent collecting wa-ter, as well as improvements in water quality, increased food consumption, and increased property value.

The Paraguay rural water supply project is now benefitting 264,000 rural residents and 25,000 indigenous residents through the construction of more than 500 water supply systems.

The modernization of Uruguay national water supply and sanitation company has resulted in increased treated water pumping capacity from nearly half a million to a million cu-bic meters—set to meet forecast demand until 2035. Also, three sewage treatment plants were built providing service to 60,000 inhabitants and sewage connections were provid-ed to about 5,500 households in 12 cities. Sector reforms have improved the sustainability of service.

Economic growth, regional integration

Expanding water demand for irrigated agriculture, urban growth and industrial development has resulted in rapid extraction of groundwater beyond the rate of natural re-charge. Per capita availability of renewable water resources is only1,719 m3/year in India and 2,138 m3/year in Chi-na versus 10,231 m3/year in the US. Over-extraction of groundwater, already an issue in middle-income countries in South Asia, the Middle East, North Africa, East Asia and North America, is expected to become critical over the coming 15 years. Rapid urbanization will exacerbate the problem: by 2030, 65 percent of the world’s population will be living in urban areas, with over 90 percent in develop-ing countries. Annual investments required for global water security are estimated to be US$180 billion, whereas the current annual investment is only US$75 billion. Unman-aged economic development negatively affects water avail-ability and quality, with implications on future growth. In partnership with McKinsey, IFC is developing a framework for decision-making to inform policy makers, private sector investors and end-users on options available to approach is-sues for scarcity.

In Latin America, the Bank is supporting IBRD countries with integrated urban water management to address com-petition for scarce water resources and pollution of river and groundwater systems. In large urban areas such as Sao Pau-lo, Brazil, this includes integrating land use management, water supply and sanitation services and pollution control. This also improves quality of life of the poor and vulnerable.

Monitoring Performance of Urban Water and Sanitation Utilities: International Benchmarking Network (IBNET)

the International Benchmarking network (IBnet) is an initiative that facilitates effective performance monitoring of water and sanitation utilities

the IBnet website includes a searchable database with indicators from more than 2,500 utilities from more than 85 countries, a toolkit that can be downloaded in different languages, a database with an indicator search mechanism and reporting formats and a section with links and resources to assist measurement and benchmarking. IBnet enables analysis of how the per-formance of the utility or the sector can be improved. advanced research and comparisons can be conduct-ed, including comparison of benchmarks, development of new indicators that reflect the specific utility needs/sector needs, and frontier and productivity analysis.

IBnet is often introduced as a tool for monitoring utility performance within Bank-financed projects and through advisory services provided by the Water and sanitation Program. In many countries, govern-ments and sector regulators are requiring this type of performance monitoring. In Brazil, for example, fed-eral funding to the sector is now contingent on avail-ability of utility data.

IBnet was jointly developed by the World Bank and the Water and sanitation Program, with support from the Department for International Development of the u.K.

for more information visit [email protected]

IBrD resuLts 23

Under the Sao Paolo Water Quality and Pollution Control Project (Programa Guarapiranga) support was provided to develop capabilities to manage water basin in an environ-mentally sustainable manner, rehabilitate and expand sani-tary infrastructure, and contain inappropriate settlements and land use. This directly benefited over 49,000 house-holds and has provided indirect benefits to some 3 million people. Support under the Ceara Urban Development and Water Resource Management Project has increased efficien-cy of water use through water basin planning and manage-

ment, and has provided reliable, economic and safe water supply to communities in critical need.

Global water consumption is expected to increase by 50 percent over the next 30 years to meet development needs. Among all water-use sectors, agriculture represents the larg-est, with 70 percent of global water withdrawal. By 2050, there will be an estimated 2.3 billion more people to feed (one third more than today). Meeting future food needs will require a more efficient use and additional sources of supply to support the increasing demand for water for agriculture.

Egypt has succeeded in helping about 850,000 families in-crease annual their agricultural production by about US$35 million. This has been achieved by improving drainage con-ditions and avoiding yield and production losses that would result if water logging and soil salinity problems were to persist. Tertiary canals serving about 200,000 acres have also been improved to convey water to farmers in a more equitable way.

The China Yangtze Dike Strengthening Project contributed to protection of property and life along the middle reaches of the Yangtze River by strengthening flood control struc-tures, protecting riverbanks against erosion and improving operations and maintenance of flood control installations, benefiting about 75 million people and protecting 1.6 mil-lion hectares of farmland in Hunan and Hebei Provinces, the heartland of China’s economy and home to major rail-ways, oil fields, industrial complexes and urban centers such as the city of Wuhan.

Environment

Climate change adds to the complexity of managing water resources, by intensifying and accelerating the dynamics of the hydrological cycle (increased storm activity, rising sea levels, saltwater intrusion, and coastal inundation). The climate change debate has emphasized variability and un-certainty as parameters for investment decision-making, focused attention on addressing water issues in an inter-temporal context with sustainable water resource man-agement instead of the traditional static demand-supply approach and renewed emphasis on adaptation to climate change in water investment and management.

The Water and Sanitation Program: Supporting Informed Policy Choice in Sanitation

today 2.5 billion people lack access to improved san-itation and a significant number of this population is in IBrD countries. Progress in sanitation could be ef-fectively accelerated through a) prioritizing sanitation investment as a critical component of the country’s economic development and b) knowledge to develop scalable pro-poor models to serve the poor in these countries. the Water and sanitation Program (WsP) works to provide these solutions through several ini-tiatives, including:

• targeted research on critical gaps in sector knowledge, such as the economics of sanita-tion Initiative which highlighted the high cost of poor sanitation. this five-country study in east asia demonstrated that lack of adequate sanita-tion had an economic cost of over us$9 billion a year, or 2 percent of combined GDP of these countries;

• technical assistance for implementing at-scale sanitation and hygiene projects, including the scaling-up sanitation and Hand-washing pro-grams under implementation in India, Indonesia, Peru, senegal, tanzania, and Vietnam; and

• transferring global best practices across re-gions on innovative approaches, such as how to reach the un-served poor through creating local sanitation markets as seen in the sanitation Mar-keting program created in asia and now imple-mented in Peru.

for more information, visit www.wsp.org.


The Bank is supporting IBRD and blend countries with integrated water resources management both within and across borders. Major trans-boundary initiatives include:

Ô Management of the Indus Development Fund for fi-nancing irrigation, storage and other works in Pakistan and to support settlement of differences and disputes

Ô Support to new EU member states and candidate coun-tries on the Danube to meet integrated water resources management obligations under the EU Water Frame-work Directive

Ô Investment support to countries bordering the Aral Sea with trans-boundary basin objectives and to ripar-ian dialog on hydropower, irrigation and other water uses in the Amu Darya sub-basin

Concerns about the quantity of water are compounded by quality issues. In most urban areas of the developing world, water resources are grossly polluted by human and indus-trial waste, to the point that urban rivers are degraded with major impacts on the quality of urban life and widespread effects on health and environmental quality. The Bank is supporting IBRD and blend countries to conserve environ-mental services of freshwater and coastal ecosystems, soil, biodiversity and fisheries.

The Croatia Coastal Cities Pollution Control Project sup-ports improved quality of Adriatic coastal waters to meet EU ambient quality standards in the participating munici-palities to preserve one of Croatia’s most important growth drivers (tourism revenues account for 25 percent of GDP). By improving wastewater collection and treatment and

strengthening institutions and environmental monitoring, the first phase of the three stage program, approved in De-cember 2009, has benefited an estimated 146,000 residents and 225,000 tourists. Phase two, which was approved in April 2009, is expected to benefit 326,000 residents and 338,000 tourists.

In China, more than 18 million people have benefited either directly or indirectly from improvements to water quality as a result of five projects in China that closed in FY2008 and FY2009—the Sichuan Urban Environment Project, the Huai River Pollution Control Project, the Chongqing Urban Environment Project, the Guangxi Urban Environ-ment Project, and the Liao River Basin Project. These re-duced pollution by expanding collection and treatment of wastewater, expanded supply of safe water, improved solid waste management collection and disposal, and strength-ened monitoring and regulation of water quality.

Sector reforms

Engineering approaches to water should be complemented by effective management systems at the sector level. Techni-cally, over 50 percent of the demand-supply gap could be reduced through a range of investments across the water sub-sectors including irrigation efficiency, wastewater re-use, desalination and rainwater harvesting.18 Progress can be achieved if parallel efforts are conducted to strengthen governance and public accountability.

Water sector projects typically help clients to improve sec-tor management and governance by supporting establish-ment and/or strengthening of sector institutions (e.g., regulators, service providers), improving accountability by introducing performance agreements, monitoring systems and transparency, increasing participation in project plan-ning, financing, implementation, monitoring and oversight and, in some cases, in managing operations.

IBRD projects have also supported Public-Private-Partner-ships in the water sector, primarily in East Asia, Europe and Central Asia and Latin America. A recent study documents that PPPs have been effective in improving efficiency, access and quality of service. Since 1990, more than 24 million people have connected to PPP piped water.19

IBrD resuLts 25

Increased transparency, accountability and participation have led to reduced costs, improved efficiency and effec-tiveness of service providers, decreased water and energy

consumption by residents and businesses and increased compliance with environmental regulations.

The GAC Squad supports mainstreaming of governance and anti-corruption in infrastructure operations by provid-ing operations support, for example, to strengthen results-based monitoring (Brazil), to improve utility customer interface (Uzbekistan and Tajikistan) and to clarify regula-tory and accountability mechanisms (Paraguay). A Source-book on Deterring Corruption and Improving Governance in the Urban Water Supply and Sanitation Sector was launched in 2009 and learning events organized for staff and partners.

China: Improved project planning, design and procurement brings cost savings and higher quality

the Project appraisal Document for one major wa-ter project in china noted, “Past experience in china is that Bank financing of large civil works leads to a more structured approach to planning, design, pro-curement … than is customary in locally-financed projects. Bank involvement and procurement proce-dures and documents have often resulted in cost sav-ings of as much as 20 to 25 percent. Quality of works is normally of higher standard because of better con-struction supervision… organizational arrangements for project implementation are more transparent and driven by technical and economic rather than politi-cal judgments … closer attention is given to achieve financial sustainability and to resettlement and envi-ronmental standards.”

In a number of projects, cost savings in projects have been reallocated to benefit more people.


urban Infrastructure

More than half of the world’s 6 billion people now live in cities. During the next 20 years, the UN projects that 90 percent of urbanization will take place in developing coun-tries. Urban populations in Africa and Asia will double in this period. By 2030, developing countries will be home to 80 percent of the world‘s urban population. The crossing of this demographic milestone raises important questions about how to better deliver development assistance in the decades ahead.

No country has developed without urbanizing. Nearly all countries were at least 50 percent urbanized before reaching

middle-income, and all high-income countries are 70 to 80 percent urbanized. In the developing world, urbanization is credited with helping many countries reduce poverty over the past decade. But urbanization is not without its costs and challenges, especially for the most vulnerable of urban residents.

The issue is no longer how to stop urbanization but rather how to harness its potential benefits to enable growth and improve the prospects for the poor. As the world has ur-banized, IBRD’s urban portfolio has expanded in response. IBRD investment financing for urban infrastructure, slum upgrading, housing finance, municipal governance, and environmental improvements in the last ten years now ac-counts for US$14 billion for 115 urban operations in more than 50 countries.

Access

Over time poverty is urbanizing, as an increasing number of the poor now live in cities. In fact, it is in regions where urbanization is already significantly advanced, such as Latin America and the Caribbean and Eastern Europe and Cen-tral Asia, that the proportion of urban poor relative to the total poor is greatest. Land and housing become prohibi-tively expensive in urban areas which is why the poor are often found living on hillsides and in flood plains, in waste dumps and in densely packed slums, often in fear of sudden eviction. These settlements are where income poverty, poor housing, inadequate infrastructure and services, crime and violence, and, increasingly, man-made and natural disasters converge. In many areas, neighborhood stigma is a major constraint for the poor reducing people’s access to jobs and resulting in other types of discrimination.

Individual slum upgrading projects and programs have achieved success; however, it is clear that broader approach-es are needed to address the magnitude and scope of expand-ing informality and slums. Brazil, Mexico, South Africa, and Thailand are among the places where IBRD has supported the political commitment at the central-government level, leading to large-scale slum upgrading and service provision for the poor. The Baan Mankong Urban Upgrading Project in Thailand, for example, demonstrates the large-scale im-pacts that can be achieved by supporting community-led ef-

Figure 7. Urban Development Lending and Operations

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Figure 8. Urban and Rural Population Growth

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IBrD resuLts 27

forts. In this project, low-income communities design and manage upgrades themselves using infrastructure and hous-ing subsidies in the form of up-front lump-sum payments from the Thai government. By the end of the first five years of the program, 53,976 households had been reached, in 1,010 communities in 226 cities, through 512 projects in-volving upgrading, tenure security through community co-operatives, and in some cases, planned relocation.

An integrated approach often is needed to reach those in slums who may not have formal property rights as well as the homeless in cities. Educational initiatives can provide preschools and childcare programs in urban slums and en-able mothers to enter the labor force. In some places, youth programs target those who are particularly vulnerable to unemployment and social problems linked to social and economic exclusion. This was the case in Brazil where in-vestments in social infrastructure for day care, youth train-ing, and health care were combined with physical upgrading of slums.

In addition to physical improvements and social services, legal and regulatory reforms are needed to promote the well functioning land and housing markets so critical to the economic prosperity and social development of cities. Clar-ity of property rights, for example, underpins urban land markets, encourages investment, allows housing finance systems to develop, and is a prerequisite to urban policies

such as urban renewal or zoning for density. The IBRD has supported interventions aimed at clarifying and registering property rights through cadastre development, streamlined processes, and reducing registration costs. The cadastre modernization project in Turkey, for example, was found to reduce the time taken to register a property and enable appraisals based on international standards.

A number of IBRD projects have focused on the expansion of housing finance systems to meet the needs of an emerging middle-class. Prerequisites for a functioning primary mort-gage market include land titling or a registry system, enforce-ment of contracts including foreclosure procedures, and fair and transparent underwriting guidelines. In Mexico, Brazil, and Morocco, the IBRD provided a series of large-scale housing development policy loans to help implement these and other related reforms. With such systems in place, scarce subsides can then be better targeted to lower-income house-holds. In Mexico, a US$500 million Development Policy Loan (DPL) helped restructure and rationalize housing sub-sidies so that households earning less than three minimum wages saw their percentage of total subsidies increase to 49 percent from 7 percent over a two year period. In the follow-ing year, this had further increased to 61 percent.

Economic Growth

The importance of investments in cities cannot be over-stated, especially where urban infrastructure assets are key hubs in national and international networks. For example, improving urban seaport efficiency, port infrastructure, and handling can reduce shipping costs by more than 12

At a glance:

In IBrD borrowing countries, there are approximately 1.7 billion people living in urban settlements and now comprising over half the population.

an estimated 1 billion, or 32 percent, of urban resi-dents worldwide live in slum settlements.

Over the past decade, IBrD lent us$14 billion for ur-ban development activities in 115operations in over 50 countries.

In fiscal year 2008, 83 percent of IBrD projects in-volving urban development were rated as satisfactory or highly satisfactory by the World Bank’s Indepen-dent evaluation Group


percent. However, such improvements usually are not achieved by cities alone. Rather, they require support and coordination at the national level to ensure good connec-tivity among cities and with agro-processing centers and transportation hubs.

In addition to traditional areas of infrastructure invest-ment, IBRD has undertaken some innovative initiatives in several sectors of increasing importance. The conservation of cultural heritage assets not only preserves historical sig-nificance but also increases income-earning opportunities, city livability, and economic competitiveness. In the Bos-nia-Herzegovina Pilot Cultural Heritage project, for ex-ample, the reconstruction of the iconic Mostar Bridge and other municipal infrastructure investments made a signifi-cant contribution to the revival of the city center, reconcili-ation among residents, and the reestablishment of the local tourism industry, with tourism arrivals increasing four-fold in just one year. Urban regeneration and “brownfield” rede-velopment are other areas of impetus for economic growth. Here, growing demand, particularly in Eastern Europe, East Asia and the Middle East and North Africa, has signaled the need to expand engagement in both advisory services and investment lending in response.

Collecting and managing data to inform strategic economic development efforts is another area of focus for IBRD. Sub-national investment climate studies have been undertaken in regional cities in China and elsewhere. City development strategies (CDS) are a tool with a strong local economic de-velopment focus and are administered in partnership with Cities Alliance. CDSs have been utilized in such diverse places as Chuvashia and Stavropol in the Russian Federa-tion and across cities in the Philippines. Recently, IBRD pi-loted a new tool, the Inner-city Market Assessment (IMA), in Bogota, Colombia and Johannesburg, South Africa. The IMA utilizes data mining techniques to uncover un-derserved markets in urban areas as a means of attracting investment, jobs, retail, and financial services. These tools can help build consensus, identify comparative advantages, benchmark economic performance, and measure progress over the long term.

Environment/Climate Change

An estimated 360 million urban residents live in low-eleva-tion coastal areas, increasing their vulnerability to climate change-induced storm surges and rising sea levels. The ur-ban poor often live in substandard housing in unsafe areas on sites that are vulnerable to floods, landslides, and earth-quakes. IBRD has supported efforts to reduce the risk of disaster for poor urban populations. One example is the fi-nancing of risk atlases in Mexico which incorporate disaster prevention criteria in selected cities and generate incentives for national and local governments to invest in disaster pre-vention. By mid-2008, 63 cities had prepared risk atlases.

Cities account for about two-thirds of the world’s total energy use. Energy efficiency can offer practical solutions to budget-constrained cities in meeting their energy needs without sacrificing their development priorities. The Kiev Public Buildings Energy Efficiency project, for example, implemented a series of energy savings measures resulting in a 17 percent reduction in heat consumption as com-pared to pre-project levels. In addition, the project nur-tured the growth of a domestic industry of contractors and suppliers to retrofit buildings for energy savings. During the project, 27 contracts were signed with 13 local compa-nies to carry out technical audits, design, installation, and other services.

Cities Alliance – City Development Strategy

Cities Alliance is a global coalition of cities and their development partners committed to scaling up suc-cessful approaches to poverty reduction. now in its 10th year of operation, cities alliance assists cities across the developing world with a two-pronged ap-proach. first, cities alliance supports citywide and nationwide slum upgrading efforts, including secure tenure, access to finance, and policy reforms. sec-ond, cities alliance helps cities create city Develop-ment strategies (cDs) in which local stakeholders define a vision for the city and set priorities to spur the engine of economic growth. cities alliance has supported more than 100 city development strate-gies over the past decade in 48 countries, of which some 11 are multi-regional in nature. several cDss have been considered best practice. the IBrD staff collaborates closely with cities alliance on these and other initiatives.

IBrD resuLts 29

Some projects are designed to achieve multiple environ-mental objectives. The Amman Solid Waste Management Project was approved in 2008 for the amount of US$40.5 million as a sub-national loan to the city with a sovereign guarantee from the Kingdom of Jordan. The project system-atically addresses municipal solid waste management issues and initiates steps towards making the system more inte-grated and efficient while mitigating negative environmen-tal effects at both the local and global level. Specifically, the project will environmentally upgrade and expand the exist-ing municipal solid waste landfill to meet Amman City’s disposal needs and generate green electricity while mitigat-ing greenhouse gases. Moreover, IBRD’s Carbon Finance Unit has agreed to purchase part of the Certified Emission Reductions (CERs) resulting from this project which will likely amount to US$15 million by 2014. The project will also generate green electricity with revenues estimated at US$25 million to 2019.

Sector Reform

In developing countries, and even in some middle-income countries, a central issue in urban management is the inad-equate or unequal provision of basic infrastructure—water, waste disposal, and power—to urban residents. These de-ficiencies have real economic consequences. In the case of Latin American cities, a poor or missing infrastructure ser-vice is estimated to have reduced urban economic output by 10 to 15 percent. The burden is even higher on small firms and home-based enterprises that cannot afford to provide their own infrastructure services if existing services are un-available or unreliable.

Decentralization of both decision-making and resources is key to improving the quantity and quality of services for all urban residents. As cities expand their footprint, often spill-ing over existing boundaries, municipal governments be-come saddled with an ever-growing list of responsibilities, services, and activities to manage. This increase in responsi-bilities, however, often is not accompanied by increased re-sources. A number of IBRD efforts, therefore, have focused on helping municipalities raise their own revenues through local taxes, levies, and user fees. In the Tamil Nadu Urban Development project in India, large municipalities, such as Madurai, significantly increased their own revenues en-

abling them to finance more infrastructure investments. In Georgia, self-generated revenues among project participant municipalities were 65 percent higher over a three-year pe-riod compared to municipalities that did not participate.

IBRD municipal development projects work to increase the capacity of local governments across several fronts. These include training, data collection and analysis, implement-ing municipal contracting, and monitoring local-govern-ment results. For example, information and data systems for broad-based municipal planning were implemented with the assistance of IBRD in Chile. As a result, the Regional Development Sub-Secretariat makes annual data on lo-cal finances, education, health, and geographic and social indicators available to policy makers and the public. Re-sponsiveness to citizens also is an area of emphasis. Through technical assistance provided in Indonesia, the city of Bo-gor established online and street-level public information booths that were found to be well-functioning five years after completion of the project.

Many IBRD municipal development projects are designed to serve a large number of municipalities. Such economies

ECO2 Cities is a new initiative that aims to help cit-ies achieve greater ecological and economic sustain-ability. cities are guided through a series of steps that help them plan, manage, and design integrated urban systems. In a clear departure from typical ur-ban planning, ecO2 cities promotes a more holistic framework by incorporating all capital assets–manu-factured, natural, human and social–into city man-agement, planning, and investment decisions. for example, using an ecO2 cities audit, participating cities can develop a baseline diagnosis of their cur-rent status and suggest such measures as changing technologies and retrofitting infrastructure and build-ings. the ecO2 program documents and transfers the lessons that can be learned from cities such as curitiba, Brazil, singapore, stockholm, Yokohama, and Vancouver–places that have embraced sustain-able development, realizing economic growth and decreasing pollution and reducing waste in the pro-cess. the ecO2 approach can be adapted and cus-tomized to the particular needs of a city.


of scale in delivering assistance is important because sec-ondary cities are the fastest growing in many countries and this is the best way to deal with the challenges of multiple urban centers. In Argentina for example, under the Second Municipal Development project, financial and technical re-sources were concentrated in four municipalities to simul-taneously tackle critical areas of modernization rather than a more piecemeal approach across multiple municipalities. A recent evaluation by the Independent Evaluation Group (IEG) on Municipal Management Projects highlighted the relative success IBRD has achieved by using this “wholesale” approach. Under the project, 515 municipalities imple-mented over 800 subprojects and contributed to improving the living conditions of over 7 million people.

IBrD resuLts 31

Information and communica-tions technology (Ict)

As a result of globalization, ICT development is a basic and critical condition for the competitiveness of individu-als, firms, cities, nations, and regions. ICT offers the poten-tial to decrease the impact of distance and time, and allows developing countries to integrate into global production chains and markets. Furthermore, the diffusion of ICT is having a direct impact on poverty alleviation through in-come generation and better integration of the underserved populations into the economy.

Recognizing this, IBRD financing is being used to help cli-ent countries broaden and deepen sector and institutional reform, increase access to information infrastructure, sup-port information and communication technologies human capacity, and support information and communication technologies applications.

IBRD commitments have nearly quadrupled from US$50 million in FY2003 to $196 million FY2009,20 with signifi-cant focus on Adaptable Program Lending and integrated projects, as well as private sector projects in frontier markets that facilitate regional integration, reduced cost of connec-tivity and development of “New Economy” skills, such as information technology capabilities (Figure 9).

Access

Over the last 10 years, the ICT sector in IBRD countries has undergone a revolution as a result of technological devel-

opment and sector reforms which resulted in phenomenal increase in access. The proportion of the population living within range of wireless telephone networks increased dra-matically to 84 percent by 2007 from less than 70 percent at the end of the 1990s. By the end of 2008 there were 3.1 bil-lion telephone subscribers (fixed and mobile combined) in IBRD countries, around 76 percent of whom were mobile subscribers. The total number of internet access in IBRD countries has risen to more than 17 percent in 2008 from less than 2 percent of the population in 1999.

IBRD has mainly been focusing on promoting competi-tion and a sound investment climate in the sector. It has recently started to support public sector investment that catalyzes and crowds in further private investment through programs addressing market gaps in terms of rural access and in country/regional operations financing high-speed Internet networks (e.g. Armenia, Pacific Islands Connec-tivity, Caribbean Regional Communication Infrastructure Program), or post conflict reconstruction (e.g. Iraq).

In the case of Dominican Republic, for example, IBRD helped the government establish a modern regulatory framework and a conducive investment environment. As a result, investments in the sector during the project im-plementation amounted to US$2 billion, mostly coming from new private operators attracted by the new regula-tory framework. Total teledensity—the number of fixed plus mobile telephones per 100 people—increased to 55.6 in 2006 from 11 in 1997—a five-fold growth. In addition, a strong universal access agenda that began with support from IBRD has recently resulted in the provision of broad-

Figure 9. IBRD ICT Lending, $ Millions, FY09

Telecommunications,93.0

Infotechnology,

88.9


band services in rural and low income areas across the coun-try through private-public partnerships.

Economic Growth

Information and communications infrastructure is critical for economic growth, and generates substantial revenues for governments of IBRD countries. It is estimated that a 10 percent increase in mobile teledensity contributes to 0.6 percent of long-run GDP growth, and that the economic impact of wireless in China amounted to over US$100 bil-lion in 2005, or five percent of GDP. More recent evidence indicates that the positive impact of telecommunications infrastructure extends to new technologies such as internet, including broadband and may, indeed, exceed the impact of traditional voice-based communications. It is estimated that every ten percentage points increase in broadband penetration results in 1.4 percentage point additional GDP growth in developing countries.

The telecommunications sector is also a major generator of revenues for the government through taxes, sector lev-ies and, in some cases, revenue-sharing arrangements—the revenues are equivalent to about four percent of GDP on average. The process of market reform itself also generates significant government revenues. Private investors trans-ferred approximately US$100 billion to governments of IBRD countries through privatizations and license awards between 1997 and 2008. The sale of a mobile license in Mo-

rocco generated US$1.3 billion in short term fiscal gains and about three times more over a period of 10 years.

Moreover, the information and communications infrastruc-ture has become the largest distribution platform, with mo-bile phone reaching more than 4 billion people worldwide. The wireless technology is mobile, easy to use, the deploy-ment is flexible and the rollout costs are relatively low. So it reaches rural population with low levels of income and lit-eracy, improving existing and promoting new economic op-portunities at all levels for the population. A recent study of very small fishing businesses in Kerala, India, showed that, by using mobile phones to find out which markets have the best prices for their catches, fishermen were able to increase their net incomes by 9 percent.

Climate Change/Environment

IBRD financing of ICT initiatives can have a significant im-pact in abating climate change, and portends great growth potential. It is estimated that ICT contributes about 2–3 percent of total global greenhouse gases (GHG) emissions globally, similar to the amount generated by the aviation industry. ICT not only impacts the level of GHG emitted within the sector, its larger influence lies in enabling energy efficiencies in other sectors, reducing and may even in some cases eliminating GHG emissions in a given process or fa-cility. The latter is estimated to deliver carbon savings five times larger than the total emissions from the entire ICT sector in 2020.

ICT also plays a particularly important role in adaptation. It facilitates systematic observation of earth phenomena and is being used as such in meteorology, agriculture, forest-ry, coastal zone management and for disaster risk reduction. Several technologies stand out, including computerized weather and climate models, remote sensing technologies, geographic information systems (GIS), sensor networks, wireless and fixed broadband technologies.

An example of the use of ICT in adaptation is the Gov-ernment of Japan and World Bank cooperation agreement on remote sensing in support of adaptation initiatives and GHG monitoring. Utilizing satellites of the Japan Aero-space Exploration Agency ( JAXA), data is being collected

IBrD resuLts 33

in the form of high resolution photos of land cover and natural resources. IBRD subscribes to such remote sensing data in its adaptation projects to detect changes in vulner-able ecosystems such as glacial retreat in the Andean coun-tries and wetlands in Brazil, Colombia and Mexico.

Sector Reforms

In the past decade, IBRD has substantially increased technical assistance in the areas of policy and regulatory reforms. Lending for telecommunications infrastructure is now more focused on addressing potential market gaps through programs that introduce competition and lever-age private investment. The Bank has provided direct policy and regulatory assistance to about 40 out of the 78 IBRD countries and played a significant role in at least 27 of them. Such technical assistance loans (India) and De-velopment Policy Lending projects (Morocco, Tunisia) have produced excellent results in terms of unlocking the political resistance to telecommunications reform. In 20 of these countries, the IFC has made investments totaling US$1.33 billion over 1999–2009 and has played a key role in catalyzing private investment, bringing in US$680 mil-lion from partner investors.

Reforms supported by IBRD have led to greater sector per-formance and growth and lower prices. The telephone pen-etration in countries where IBRD has played a significant role in supporting sector reforms and addressing access gaps through grants, lending or technical assistance grew at an annual rate of 23 percent from 1999 to 2008, compared to the 20 percent IBRD average. The mobile and Internet pric-es baskets in these countries were 23 percent and 19 percent lower respectively than the average in IBRD countries over the same period.

The Morocco Telecommunications, Postal and Informa-tion Technology Sector Adjustment Loan supported the award of a competitive mobile license which attracted considerable interest from international investors. With competition, the mobile market in Morocco grew to 7.3 million in 2003from less than 117,000 mobile subscribers in 1998. The operation also supported the strengthening of an independent regulator and the implementation of regulatory reform.

This reform became a model and effective competition in the telecommunications sector spread in the region. Al-geria, Mali and Mauritania followed a similar path, with considerable benefits in terms of fiscal impact and mar-ket growth. The Algeria Telecommunications and Postal Reform Loan (a technical asisstance and investment loan) funded by IBRD has helped the government to establish an independent regulator and to introduce competition in the mobile and data sector. Algeria, previously a laggard in telecommunications reform, has jumped at the fore-front in the region. The number of mobile subscribers in-creased to about 21 million in 2006 from about 100,000 in 2001, improving the penetration to 81.4 percent from 0.3 percent.

A reform supported by an IBRD operation in five member countries of the Organization of East Caribbean States (OECS) featured the creation of the first regional regulator in the world: the Eastern Caribbean Telecommunications Authority (ECTEL). ECTEL successfully promoted lib-eralization and fair competition, harmonization of regula-tions and policies, universal service, fair pricing, access to advanced services and overall sector development across member states. As a result, the telecom share in GDP in the OECS was 6.6 percent against an average of 4.4 percent in small states, and the number of connections as a percentage of the population was four times higher than the average in small states.


LINKS TO PROjECT STORIES

1. CHINA: Solar Systems for 400,000 Rural House-holds in China http://go.worldbank.org/CQY1PTD1X0

2. INDIA: Hydropower Developmenthttp://go.worldbank.org/7L53DTY2A0

3. UKRAINE: Kyiv Public Buildings Lead Ukraine’s Push for Energy Conservation http://go.worldbank.org/ME9UXW3120

4. CROATIA: Energy Efficiency Payshttp://go.worldbank.org/HNNRNEKTU0

5. POLAND: Making Roads Safer for Allhttp://go.worldbank.org/BQLUB8BVU0

6. MEXICO: Road project makes way for NAFTAhttp://go.worldbank.org/BQLUB8BVU0

7. GEORGIA: Building Better Roads – More Truck-ing Means More Jobs, More Businesses http://go.worldbank.org/VAZIE3LXM0

8. COLOMBIA: Implementing Urban Transporthttp://web.worldbank.org/WBSITE/EXTER-NAL/NEWS/0,,contentMDK:22481019~pageP

K:64257043~piPK:437376~theSitePK:4607,00.html

9. PARAGUAY: Bringing Water to Rural Communi-ties http://go.worldbank.org/U4VSFJG980

10. BRAZIL: Improving Water Supply and Sanitation in Sao Paulo http://go.worldbank.org/JGJIIA3ZD0

11. CHINA: Wastewater Treatment and Landfill Ease Pollution of China’s Yangtze River http://go.worldbank.org/D0DIOW3PV0

12. KAZAKHSTAN: The Sea is Coming Backhttp://go.worldbank.org/DR6H6N4GQ0

13. ARGENTINA: Second Municipal Developmenthttp://go.worldbank.org/QAU2L90KR0

14. BRAZIL: Improving the Lives of the Urban Poor in Ceará State http://go.worldbank.org/PUXGR07F50

15. CROATIA: Water Polo returns to Kaštela Bayhttp://go.worldbank.org/WNXFD2Y5P0

end notes1 ———. 2009b. Energy Strategy Approach Paper Annexes. The World Bank. Washington DC2 International Energy Agency (IEA). 2008. World Energy Outlook 2008. Paris: OECD.3 World Bank. 2003. Power for Development: A Review of the World Bank Group’s Experience with Private Participation in the Electricity Sector. World Bank. Washington DC.4 ———. 2006. The Welfare Impact of Rural Electrification: A Reas-sessment of the Costs and Benefits, The World Bank. Washington DC.5 This includes both IDA and IBRD countries.6 World Bank 2006.7 Ibid8 Ibid9 IFC (International Finance Corporation). 2009. “Enterprise Surveys.” Finance and Private Sector Development vice-Presidency. www.enterprisesurveys.org/ExploreTopics/?topicid=8.10 Based on staff review Project Implementation Completion Re-ports for FY2007–0911 ———. 2009b. Energy Strategy Approach Paper Annexes. The World Bank. Washington DC

12 Levy, H. Rural Roads and Poverty Alleviation in Morocco. Scal-ing up Poverty Reduction. A Global Learning Resources Process and Conference, Shanghai May 200413 Evans, Hugh E. 1990. Rural-Urban Linkages and Structural-Transformation. Infrastructure and Urban Development, World Bank14 World Bank staff calculation, based on a review of water sector projects closed FY07 through FY0915 MDG Joint Monitoring Program, 2006 data16 WHO, The World Health Report 200217 UN 2004, A Gender Perspective on Water Resources and Sanita-tion18 The cost abatement curve, developed by IFC in partnership with McKinsey, is derived from an estimate of bulk water shortages, as-suming that pricing, water rights and a strong governance framework are in place.19 World Bank/PPIAF 2009, Marin, Philippe, Public-Private Part-nerships for Urban Water Utilities: A Review of Experiences in De-veloping Countries20 Data for ICT includes investments in information technologies and media.

Documents

World Bank Documentdocuments.worldbank.org/curated/en/...pacity and enable power to be transmitted across re-gions and states. Ô In Indonesia, a series of IBRD projects financed house-hold