Commercial Management and Financing of Roads
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Commercial Management and Financing of Roads

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      In developing and transition economies 60 to 80 per-cent of all passenger and freight transport moves by road, and roads provide the main form of access to most rural communities. Yet most of the 11 million kilometers of roads in these countries are poorly man-aged and badly maintained. Harral and Faiz (1988) estimated that in the 85 countries that had received World Bank assistance for roads, allocations for maintenance had been so low that a quarter of the main paved roads outside urban areas and a third of the main unimproved roads had to be reconstructed. Over the past two decades the situation has generally worsened, with allocations for maintenance often falling below 50 percent of requirements. Two major initiatives were launched to better under-stand the underlying causes of such poor road maintenance policies and to explore ways of establishing a secure and stable flow of funds: the Africa Road Maintenance Initiative and the PROVIAL program in Latin America. More modest initiatives are currently under way in Asia and the Middle East. These programs have clarified why roads are poorly managed and under- financed. Indeed, we can now draw working conclusions about the most effective ways to promote sound policies for managing and financing road networks. The emerging central concept is commercialization: bring roads into the marketplace, put them on a fee-for- service basis, and manage them like a business. This contrasts with the usual procedure of managing roads through a government department and financing them through general budget allocations in the same way that the health and education sectors are managed and financed. But roads do not need to be managed like a social service. Instead, they can be commercialized by introducing an explicit road tariff for users, making sure the road agency does not siphon funds from other sectors; managing the proceeds from the road tariff through a representative road board; and handling day-to-day management through a small secretariat subject to explicit legal regulations and to technical and financial audits. A number of countries in Africa, Asia, Eastern Europe, Latin America, and the Middle East are implementing such reforms designed to pro-mote commercialization.
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    Version 3.26