Rural Transport in ECA
A Tentative Strategy
1. The purpose of this brief note is to propose a framework for thinking of rural transport issues in ECA and a very tentative “vision” for development of this subsector in the medium term. The note will first provide some background information on rural roads and rural transport, then discuss the main subsector issues, and finally present elements of a strategy for the Bank.
A -Background
Rural Roads Network
2.The existing network of roads that can be understood as “rural”[1] is sizable in ECA countries. In relation to population and surface area, it is comparable to that of other countries at a similar level of economic development. Rural roads density is for example about 2.5 Km/thousand inhabitants in Romania, 3.7 in Albania, and 8.0 in Kazakhstan.
3.A relatively important share of this network is also surfaced. For example, in Romania, 67% of the district roads are paved. In Albania, the proportion is 43%. In Kazakhstan, 57% of Oblast roads are paved. At the lower end of the spectrum (field to village roads or tracks), however, very few roads are paved or graveled, and most are not engineered.
4.The condition of rural roads varies from country to country. In general, it appears to be problematic. In Albania, the only country where the Bank has had a project and where objective information is available, road roughness was around IRI 7 to 8 for the sample of roads submitted to a feasibility analysis, which indicates poor condition and a need for immediate rehabilitation if traffic is significant. In Romania, a recent inspection by a Bank engineer showed 80% of district roads to be in poor condition and most of the communal roads “in desperate shape”. In South Kazakhstan, a Bank mission found 80% of the Oblast roads visited in fair condition, 10% in poor condition, and 10% in very poor condition. Field to village roads, made of gravel or earth, with no drainage, were in poor condition and likely not to be passable after heavy rains.
5.There seems to be a consensus among all stakeholders in rural areas that rural roads have deteriorated much since 1990. This is seen as the result of the “total neglect” experienced by these roads since the economic transition begun.
Patterns of Rural Mobility
6.A major characteristic of the ECA region, and a legacy of the communist era, is that the rural population is usually concentrated in large villages and small towns. These generally have a population ranging from 3,000 to above 10,000. As a result, people have easier access to some basic public services (primary education and health care for example) because they are available right in the village. People also have easier access to the larger cities, and farmers to marketing and distribution channels, as most of the villages are located along or very close to regional roads[2] that directly connect to national roads and are often paved.
7.However, this also results in longer distances and more difficult access to the fields, a problem that seems partly addressed by using tractors and trailers to transport farmers to the fields or by farmers staying in the fields during part of the growing season. Agriculture production seems therefore highly dependent on rural tracks and motorized means of transport. This certainly contributes to the general obsession found everywhere about getting the harvest out of the fields, something that rains and clay soils in particular may make very difficult.
B - Main Sector Issues
Institutional Weaknesses
8.In general there is a two- or three-tier system for the administration of the entire road network. The national road network is under a national road administration which is normally part of the Ministry of Transport. Regional roads are under a roads or public works department under the district or Oblast authorities which are themselves under a Ministry of Local Government or Ministry of Interior[3][4]. Finally lower level roads are under the municipal or Rayon authorities.
9.The classification of rural roads and the allocation of responsibilities among government authorities generally needs to be improved. Indeed, there seems to be much confusion at the municipal or Rayon level as to what exact network the local authorities are responsible for and how roads or tracks not included in the local network should be cared for.
10.More importantly, there is a strong need to develop institutional capabilities. At the Central Government level, there is little or no capability to monitor developments regarding rural roads and to support the district/Oblast and municipal/Rayon administrations in the carrying out of their responsibilities regarding rural roads.
11.At the district or Oblast level, road administrations exist and are usually staffed with engineers and technicians that are well trained and competent in the technical aspects of road engineering. However, these administrations generally have little understanding of and no appropriate systems and procedures for (i) assessing road expenditure needs and priorities, (ii) procuring road works in an efficient and economic way, (iii) supervising the execution of road works by contractors and administering contracts; and (iv) involving stakeholders in their activities. Indeed, expenditures needs are assessed on the basis of technical standards with no objective consideration of benefit/cost ratios, and the meager funding that is made available is spread thinly on a subjective basis. Much progress has been made in the competitive procurement of road works. Yet, national procurement documents are often unsatisfactory and the carrying out of the procurement process does not meet satisfactory standards of objectivity and transparency. Finally, supervision of works is poorly done, focused at best on quantity achievements and not on the essential quality requirements. Establishment of a proper organization, formulation of adequate systems and procedures and extensive training programs on all these subjects are urgent.
12.At the municipal or Rayon level, there is generally no capability and often not even an organization to deal with local roads. Such capability needs to be created step by step as the availability of funds develops at that level. Given the current vacuum, this should be expected to take a long time. Most likely, it can be carried out in a sustainable way only after a sound institutional capability has emerged at the next level, that of the districts and Oblasts. For roads that cater to small, well defined, communities, innovative arrangements like the private road associations found in Scandinavian countries[5], may prove useful and could be tried in a few pilot projects. At the municipal or Rayon level, efforts should also be made to involve road users in the decision making process through consultation and, possibly, more direct forms of participation.
Insufficient Funding
13.In general, given the drastic fiscal constraints experienced by CEE and FSU countries since 1990, the funding made available for rural road works has only been a fraction of needs. In Latvia, where there is a road fund that functions well, about 30% of the fund’s resources are legally to be allocated to (rural and urban) municipalities. As a result, about $24 million went to municipalities in 1999[6]. In addition, the Government provided $7.6 million to a special program for rural roads rehabilitation. This amount of funding, although significant, is likely to have covered only the needs of the most important rural roads.
14.In Albania, the annual funding needs for routine and periodic maintenance of the rural roads network was estimated at $20.6 million during preparation of the Bank project. However, the Bank has estimated and accepted that the Government would provide only about $1.2 million annually out of its own funds. Even after these funds are supplemented by funds from the Bank and the project co-financier, Italy, during project implementation, annual allocation for rural roads did not exceed about $7.0 million on average. Once the project is completed, annual funding will presumably go back to $1.2 million (6% of needs).
15.In the South Kazakhstan Oblast, routine and periodic maintenance needs for Oblast roads may be estimated at about $12.0 million annually. In 2000, however, funding was only $0.8 million (7% of needs). This does not even cover routine maintenance needs.
16.Clearly, funding for rural road maintenance and rehabilitation needs to be increased substantially. There is no magic solution, however, given the drastic fiscal constraints experienced by most ECA countries. At the minimum. policy makers should be made aware of the consequences of their funding decisions, and if necessary, the official rural road network shrunk to what is affordable. Whenever a country has a road fund, as many in ECA do, it could be envisaged that a set proportion of the receipts would be allocated for expenditures on rural roads, in effect an earmarked transfer from the central government to the local authorities. A perennial problem of this approach, however, is that it runs counter to fiscal principles advocated by the IMF among others. More sophisticated, “second generation” road funds, as often advocated by the Bank, and to which the IMF is more amenable, are not feasible at this time in quite a number of ECA countries given the institutional weaknesses outlined above.
17.In the long term, better funding of rural roads will come from decentralization and local government reforms that create a better match between the responsibilities of local governments and their revenue generation capability. Such reforms are underway in most ECA countries but will take time to mature.
Technology and Business Environment Issues
18.Probably as a result of the poor construction practices prevalent during the communist times, technical standards are generally too high. If implemented correctly, road works are therefore of a higher quality and more costly than would be indicated by sound economic analysis. Efforts are underway (for example in Russia and Central Asia) to revise construction standards.
19.Road construction techniques are highly mechanized, with extensive use of cumbersome and fuel inefficient heavy machinery. Although market conditions are expected to eventually force a move towards more efficient use of labor and machinery, the Government may need to play a lead role in introducing labor intensive construction techniques and ensuring that appropriate equipment becomes available, particularly in the countries with lower income and higher population densities. This would involve pilot projects to experiment with comprehensive changes in technical standards, design methods, and procurement and supervision of works, as well as the provision of much training.
20.One major progress since 1990 has been the privatization of contractors and the development of competition in the road construction industry. In almost all ECA countries, the construction industry has restructured and adapted to drastically new ways to operate. Poor quality of the output remains a major issue, however, for projects financed from local funds. To address this problem, the Government will need, first, to improve its capability to procure and supervise the execution of road works, as recommended above, and, second, to implement programs aimed at improving the competence of contractors and easing the financial constraints under which they operate.
Development of Rural Transport Services
21.In most ECA countries, the road transport industry has been fully privatized and operates under a competitive regime. It is therefore responsive to demand. Its efficiency is affected by a number of issues at the national level, however. First, road user charges are not high enough to cover the cost of road use. Second, the legal framework (concerning mainly road worthiness standards as well as regulations on vehicle size and dimensions) is incomplete. Third, import restrictions or high tariffs on spare parts may constrain investment in vehicles and maintenance. Fourth, there is a very serious road safety problem as the rate of fatalities from accidents are five to ten times the level in Western Europe. These issues can (and usually are) addressed within the scope of Bank projects on national roads.
22.One issue that seems specific to the former Soviet Union and especially Central Asia, is the accumulation of controls and extortion of bribes from road users by various administrations, notably the traffic police and the transport inspectorates[7]. It is not clear how well this issue could be addressed under development projects. Clarifying and tightening the legal framework for road transport and streamlining enforcement mechanisms would certainly help.
C - Elements of a Strategy for the Bank
23.The Bank strategy for rural transport in ECA should give priority to institutional development and the improvement of the technological and business environment for the construction industry. Indeed the other issues mentioned above can be addressed separately. Major improvements in funding, in particular, are bound to come in the long term from local government reforms and fiscal decentralization. Increased efficiency of the road transport industry should be sought through highway or transport operations at the national level.
24.In the medium term, institutional development should be focused on improving the capability of the district/Oblast road administrations for the following main reasons: (i) a relatively strong institutional basis already exists at that level, (ii) the great majority of the rural population is located near district/Oblast roads, (iii) development of the institutional capability of municipalities and Rayons above and across sectors, which is yet to take place, is a prerequisite to improvements in their capability for roads, and (iv) municipal/Rayon road administrations, to be successful, will need support and monitoring from competent district/Oblast administrations.
25.Improvement of the technological and business environment is essential for using available resources more efficiently. It should be sought through technical assistance, training programs, and demonstration activities.
26.Both institutional development and improvement of the technological and business environment should be supported by Bank funding of road works as these works would be identified, designed and implemented in accordance with improved methods, procedures and techniques, thereby providing an opportunity for learning by doing. The use of funds should be determined on a case by case basis through appropriate feasibility studies with participatory involvement of local authorities, road users, and the population. In the medium term, district/Oblast road administrations should take the lead role in project preparation and implementation whatever the jurisdiction of the roads that eventually get funded.
Jean-Charles Crochet
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[1] Ranging from the district or Oblast roads on which most villages are located to the gravel and earth tracks that provide access to fields
[2] The district roads in Central and Eastern Europe and the Oblast roads in the Former Soviet Union
[3] An interesting feature of the road sector in Kazakhstan is that the Oblasts contract the administration of roads under their jurisdiction to the Oblast branches of the national road administration. In Kazakhstan, also, there is currently no ministry with responsibility for supervision of local governments.
[4] In the Baltic States, a sizable part of the main rural roads are under the jurisdiction of the national road administration.
[5] The above mentioned Bank mission that visited South Kazakhstan saw a road that had been rehabilitated by pooling funds from all adjacent land owners, a rudimentary example of private road association.
[6] An important part of which was likely spent on urban and not rural roads
[7] Harassment by the police and others seems much more frequent on high traffic national roads than on rural roads.