ASi" kUCTURE FlOR DEVELOPMENT

the efforts of donors to focus on common objectives. -
For exAmple, tie Sub-Saharan Africa Trasport Pol- FAnnii gai elia
icy Program coordinates donor assistance for road -ndmspr a id e ency are,large .
maintenance and in several countries lias supported ;rlitive to.m vesbnehL
the estabishment of road boards that oversee execution
of road maintenance. More generally, external B of U dollars
assistance should im to build institutional capacdty =
in those countries where it poses a serious constraint _ _ - -; _-
cooperation, as well as efforts to collect and dissem- 200
Well-designed programs of training and technical
'
lnve. i estm n.
iate information on policy options and performance
across countries, can supplement donors'
siscal
advice and financial assistance in creating an appro-
b-rde;
priate enablng envionment for successful reform J'' 123
and development of infrastructure. A ¢2 <
st
Potential payoffs from reform
.
Because of the great variatio n performance, the
payoffs from increasing the efficiency of infrastruc- 0_
ture provision wil differ from coun to country - S d - . cos,t A;n:l -i
and from sector to sector. But the rewards are poten- -_zr incued'hm - kfastructure-'
n_
tialy large across the spectrum, maing the co t- =. technical- t
ment to reform imperative and worthwlile.
.enc
Reform wil produce three types of gains: reduction
in subsidies, technical gains to suppliers. and
Wevelopmentfinance
gains to users. It is possible to make rough estimates
of the first two types of gains. The first source of
gais is the reducion in the fiscal burden of service
5
j
.
provision-costs not recovered from users. Although
a. conservative estimate can be made for ,- U ix
onlv three sectors (power, water, and railways), tie
total savings are nearly $123 billion annuallynearly
10 percent of total govenunent revenues in a. iCostsforthewatrsectoraredue to leakages,for
railays-fuel iefficiencx. overstaffin&~ andc locomotive
developing countries, 60 percent of annual infra- ninfvejstment causedby
structure investment, and approximately five times i=mu.oe°rn-s:.
annual development finance for infrastructure (Fig- iossesz- 7
ure 5). Eliminatg underpricing would not produce - -
W A
a net resource savings to the economy (as the costs -- : "'''
would be covered by users), but the fiscal relief
would be substantial.
The payoffs from better infrastructure services go
The second source of gains is the annual savings beyond reducing technical inefficency and financial
to service providers from improved technical effi- losses. Improvements -in productivity and pricing
cdency. The savings possible from raising operating would permit more effective delivery of service in
efficiency from today's levels to best-practice levels response to demand. They would also enhance the
are estimated at around $55 billion a year-pure growth and competitiveness of the economy. And
savings equivalent to 1 percent of all developing they would allow vastly greater mobilization of re-
- countries' GDP, a quarter of annual infrastructure sources for needed new investments-by generatinvestment,
and twice annual development finance ing higher revenues and by creating a policy envifor
infrastructure. Looked at another way, if the an- ronment conducive to the inflow of new investment
nual technical losses of $55 billion could be re- resources.
directed for three years-at cunrent costs of roughly This Report's agenda for reforming the incen-
$150 per person for water systems-the I billion tives and institutional frameworks in infrastructure
people without safe water could be served.
poses major challenges-but promises major bene-
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