Transport Infrastructure and Financing –An Experience Sharing Seminar
Thirty three postgraduate students and instructors drawn from ECSU's Urban Infrastructural Provision and Management Department attended a two hours long experience sharing and ideas cross- pollinating seminar on Transport Infrastructure and Financing on May 30, 2012.
The seminar conducted live at 11 sites in Africa was organized by Global Development Learning Network (GDLN), Asian-Pacific Finance Development Center as well as World Bank that jointly espoused African Association for Development Learning (AADLC) that in turn espoused ECSU.
In his lecture lead infrastructure specialist in World Bank Dr. Zhi Liu noted developing infrastructure is an expressive venture. He also noted initially the venture is funded by users and gradually it gets subsidized by tax payers. Investment on infrastructure, he further noted, paves the way for growth that mollifies poverty. In this vicious cycle, he said, infrastructure funds itself. Two institutional mechanisms channel the flows-the state budget and service provisions. Financers have a key facilitating role, he added.
He reflected the past two decades had witnessed the involvement of the private sector in infrastructural development in countries where government policies proved conducive and predictable. Creating fiscal space and offering smarter subsidies, governments are expected to provide a clear vision and display an effective coordination, he suggested.
Senior Economist working at Shanghai Municipal and Finance Bureau Dr. Li Chen on his part had presented a paper that served as a window to Shanghai's Transport Infrastructure Development and Financing.
Mentioning the lessons Shanghai got the hardest way, he enumerated strengthening regulatory mechanisms of urban infrastructural investments, setting up a sustainable urban land development master plan, diversifying financial sources as well as conciliating social acceptability and economic stability in tariffs.
In a concluding remark he made, Dr. Zhi Liu revealed adopting institutional, legal, financial frame works as well as promoting accountability and regulatory procedures as the basis of urban financing. He pointed out funding-channels could be developed by strengthening existing funds such as loans, corporate bonds as well as by developing new instruments such as local government bonds and infrastructure investment funds
Though it transfers responsibility such as investment, construction operation and management to private operators, the government mustn't withdraw from the public service, he said.
Asked how Shanghai managed to attract Foreign Direct Investment(FDI) and Private Participation in Infrastructure(PPI) Dr.Li attributed the achievements to tax holidays, regulations put in place to protect investment rights as well as guarantees given to foreign investors to take away returns that accrue from investments. He also hinted the embracement of big international organizations like World Bank in the projects gives moral support to the investors.
Responding to the questions how Shanghai managed to launch the Metro System with a modest budget at hand and how commuters tolerated the expensive fees, he said, the central government allowed us take a limited amount of loan from Germany and as a second strategy the management of Shanghai included operation lines in its stock market. He added the management had used different sources to balance the Metro tariffs.
To engage in air transport sector in spots that promise potential passengers and as such a lucrative business building commercial areas, hotel, fuel stations and other necessary facilities must be taken as prerequisites, he recommended.
He also answered maintenance works has to be given attention when projects are drafted. Governments as well have a responsibility to see to it, he reflected his stance.
According to him as they may be tide down by insufficient budget local governments have to be supplemented by the central government. Governments have to make project areas attractive and efficient. They as well have to ensure transparency and fight out bureaucracy.
"What is the role of World Bank in financing gigantic infrastructural projects?" was one of the questions raised from Ethiopia's side. Dr Zhi Lui is expected to give answers via e-mails.