## Bridges to Growth, Not Roads to Nowhere: Scaling Up Infrastructure Investment in Low-Income Countries

_IMF Blog, December 3, 2010_

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**Canonical URL:** [Bridges to Growth, Not Roads to Nowhere: Scaling Up Infrastructure Investment in Low-Income Countries](https://www.imf.org/en/blogs/articles/2010/12/03/scaling-up-infrastructure-investment-in-low-income-countries)

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## Bibliographic details
- Authors: Hugh Bredenkamp, Roger Nord
- Published: December 3, 2010

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### Overview and context
- For low-income countries, the absence of reliable infrastructure—roads, railways, ports, but also power supply—has become an increasingly binding constraint on growth.
- Investment in infrastructure can raise productivity, boost growth, and help reduce poverty, but getting investment decisions right is complex.
- Many low-income countries showed a lot of resilience during the global economic crisis. A global recovery is now underway, but it remains fragile and uneven.
- Dynamic emerging market economies are more robust and are new development partners with relevant experience in scaling up investment.

### Key statistic on financing needs
- The World Bank has estimated that, in sub-Saharan Africa alone, the total financing need is around $93 billion per year.  
- One third of this is still unfunded.

### Major messages from the IMF-sponsored conference on scaling up infrastructure investment
- Stronger framework for public sector investment decisions
  - Countries need to develop a coherent strategy for scaling up infrastructure that maximizes the growth potential.
  - Countries need to follow through on their investment strategies through a strong institutional framework that:
    - keeps implementation in line with the strategy,
    - ensures that projects are properly appraised and good projects selected,
    - sees that adequate resources are budgeted so that investment projects can be completed and maintained.
  - Good governance and strong public financial management systems are critical.
  - Countries need to be savvy about how they finance the scaling up:
    - ensure that the fiscal revenue base is strong and growing—through tax reform and good revenue administration—so that the public sector can more easily afford the debts it takes on,
    - ensure that all borrowing indeed finances investment, and hence growth, not consumption,
    - adopt a good debt management strategy to ensure that the overall amount and type of debt that the country assumes is within its capacity to repay.

- Support for capacity building
  - Multilateral institutions and donors can help with financing, but their contribution to capacity building is equally important.
  - From the IMF’s perspective, capacity-building support includes:
    - helping countries design budgets consistent with infrastructure plans,
    - building capacity to manage their debt,
    - developing better tools to assess the likely growth returns from investment.
  - New development partners have practical experience to share. Example given:
    - The Chinese have had a lot of success in planning coherent investment, constantly reassessing infrastructure gaps and reorienting resources, and ensuring that infrastructure projects are linked up (for example, if they build a port, they also build roads and railways that lead to the port).

- A bigger role for the private sector
  - Governments should define strategy and identify gaps, but in some areas it is sensible to rely mostly on private sector investment.
  - Energy and telecoms are examples where a mixture of public and private sector investment can work.
  - Tapping private sector equity financing allows investment to be scaled up beyond what the government might be able to afford.
  - It is crucial that governments create an enabling environment—good tax system, good governance, and a sound legal framework—to give confidence that the environment will allow a proper return on private investments.

### Implication and next steps highlighted
- The conference set the stage for ongoing dialogue about how low-income countries can increase the volume and quality of investment in a sustainable way.

*Bridges to Growth, Not Roads to Nowhere: Scaling Up Infrastructure Investment in Low-Income Countries — Hugh Bredenkamp, Roger Nord, December 3, 2010*

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## References

- [conference](http://www.imf.org/external/np/seminars/eng/2010/spr/lic/index.htm)

_Source: https://www.imf.org/en/blogs/articles/2010/12/03/scaling-up-infrastructure-investment-in-low-income-countries_