Infrastructure

It is crucial to rebuild infrastructure in order to unlocking a fragile society’s economic potential, while also promoting social integration and reducing horizontal inequalities (Mills and Fan 2006; UNDP 2008; de Vries and Specker 2009). Also well documented is its potential to provide short-term jobs in construction and public works programmes (de Vries and Specker 2009). DFID (2010) suggests that transport infrastructure can help open opportunities for particular regions and address potential grievances and instability by removing geographical exclusion. Infrastructure also promotes economic activity by lowering unit costs, expanding markets and facilitating trade, although the effects of infrastructural investment on productivity and output are context-specific and need to consider local needs and priorities (UNDP 2008). Infrastructure is also considered to have large positive effects on long-term economic growth through its contribution to an enabling environment for the private sector (USAID 2009), its influence on health and education (UNDP 2008), and its economic multiplier effects (de Vries and Specker 2009). However, infrastructure investments can also provide opportunities for corruption, exacerbate inequalities, reinforce a war economy (for example, if road construction makes illicit trade easier), or become a target for insurgents in places where there is still conflict. de Vries and Specker (2009) note that, while large-scale infrastructure projects are likely to have a greater development impact, they tend to involve more work with machines, lessening employment effects, and are often political, carrying distributional consequences.

What works and does not work in infrastructure

Jones and Howarth (2012) provide a comprehensive review of the evidence on the impact of international support for improving infrastructure in contexts of conflict and fragility, drawing on a literature review as well as case studies from DFID-supported infrastructure programmes in Afghanistan, DRC, Nepal and South Sudan. Although they identify a number of evidence gaps, their findings suggest that the economic returns on infrastructure investments are likely to be high in post-conflict environments, particularly those in power and transportation. They also find that, while the construction of transport and water infrastructure generates significant short-term employment and boosts economic opportunities, sustaining these opportunities requires the strengthening of institutions. The authors suggest a number of ways to address the issues identified, including the need for infrastructure programmes to:

define and adapt a theory of change;
incorporate contextual, political economy and conflict analysis;
develop clear strategies that recognise different programme stages while ensuring long-term sustainability;
sustain focus on capacity development and institution building across private and public sectors;
involve local communities;
generate evidence of their effect.

The UNDP (2008) stresses the value of using locally sourced labour and materials, the desirability of gearing interventions towards regions and sub-sectors where the local private response is inadequate (to avoid crowding-out), and the need to understand the interaction between social and ethnic dynamics and conflict to ensure tensions are not exacerbated by infrastructure programmes. USIP (2008) recommends that all stages of infrastructure development in FCAS – assessment, planning and coordination, building and maintaining legitimacy, execution, and transition planning – are done on the basis of conflict analysis. At the assessment stage, this involves conducting a robust analysis of stakeholder interests in infrastructure and peace/conflict dynamics, the capacity of host institutions, and potential spoilers. In execution, USIP recommends small, community-driven infrastructure projects implemented by local actors and ensuring links between short-term initiatives and long-term projects. Other recommendations include establishing a clear leader to coordinate the project, integrating a capacity development plan at all project levels, and setting goals and implementing safeguards to meet security, capacity, sustainability and public perception objectives from the outset of the project.

Anand (2005) proposes a framework for analysing what different projects can contribute towards reducing poverty, effective governance and state reconstruction, and peace. He argues that this kind of analysis, if it is done with the participation of aid workers, local communities and NGOs, can help to clarify the relative impacts of projects and therefore help determine where to allocate aid. Anand says this kind of cooperation can also clarify short-term and long-term policy aims, create appropriate financing and accountability mechanisms, and recognise policy tensions and trade-offs.

An example of one of these policy trade-offs, specific to infrastructure, is the decision of whether to improve or replace local procurement processes, contributing to long-term capacity-building and development objectives, or to use international bidding processes, ensuring greater transparency. Eisendrath (2007) advocates the use of operating contracts for managing infrastructure enterprises to manage this trade-off. Reviewing water and electricity infrastructure projects from ten countries, he concludes that incentive-based operating contracts adapted to the local context can ‘turn around’ the difficult operating environments of poorly performing electricity and water utilities, resulting in reduced losses, increased collections, and more efficient and accountable management.

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