MDBs play a key role in financing transport projects particu- larly in low- and middle-income countries (LMICs), where they have approved a total of US$50 billion for road and urban mobility projects between 2018 and 2022 — aver- aging about US$10 billion annually. 22 Note that spending on roads is not limited to the construction of new roads but also includes funding for upgrading, rehabilitating and maintaining existing roads. Prioritizing new construction while neglecting the upkeep of existing infrastructure has long been recognized as highly inefficient (Harral and Faiz, 1988). 23 International policy advice continues to stress the importance of sustainable road asset management. 24 However, continuing to invest at current trends is insuffi- cient. The G20 Infrastructure Outlook 25 estimates US$24.9 trillion in needed investments in global road infrastruc- ture between 2024 and 2040, which corresponds to more than a third of total global infrastructure investment needs during that period. If road investments continue to follow current trends, there will be a US$6 trillion investment gap during this period.
Meeting these funding needs is a challenge in developing countries, particularly as private investors have shown less interest in road projects compared to other sectors: The energy sector has seen three times as many public-pri- vate partnerships (PPPs) as the transport sector and most private investment in the transport sector of developing countries has been for ports and airports, for which the currency risk is mitigated by foreign exchange earnings. At the same time, private funding for roads in developing countries has been declining, with most funds concen- trated in middle-income countries. 26 These trends deepen the need for bilateral and multilateral development finance institutions to support developing country governments in funding crucial road investments, as well as in preparing projects with the necessary risk/ return structure for attracting private investors. Recog- nizing these needs, the OPEC Fund has long provided signif- icant resources to the transport sector (see next page).
22 Multilateral Development Banks Road Safety Financing in Low and Middle-Income Countries 2018–2022
23 Road deterioration in developing countries. Harral and Faiz 1988
24 Review of impacts on roads sector investments on employment. Interna- tional Labour Office 2017
25 https://outlook.gihub.org/
26 Maximizing finance for safe and resilient roads. World Bank 2018
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