It is widely recognized that cost-effective, reliable, and affordable infrastructure services are critical for sustainable development, and a necessary condition for reaching economic, social, and environmental goals. The cost of not having adequate sanitation in Vietnam, Indonesia, and the Philippines, is estimated at approximately $9 billion a year, or about 2% of their combined GDP¹. World Bank survey² in 26 countries in Europe and Central Asia, results suggest that the total benefit for the economy from eliminating the existing electricity outages ranges from 0.5 to 6 percent of gross domestic product. If all interruptions in water service were to end, the economy could receive a gain of about 0.5 to 2 percent of gross domestic product.

The catalytic role of infrastructure in poverty reduction has been recognized in the Sustainable Development Goals (SDGs), which single out access to water supply and sanitation service targets to be achieved by 2030. Infrastructure sustainability is at the core of the global sustainable development agenda: 6 out of the 17 preliminary Sustainable Development Goals deal directly with infrastructure. Access to other infrastructure services such as electricity, transport, and telecommunications is indispensable for achieving the health, education, gender, and income poverty goals. For example, over 500,000 women die each year due to childbirth complications; most of these deaths could be prevented through timely access to essential childbirth-related care, for which road access is crucial.³

Infrastructure for development

The development of productive infrastructure encourages economic growth, private enterprise and employment. It contributes to the reduction of poverty and improves livelihoods though access to basic services. Reliable electricity supply, efficient transport systems, a clean water supply, access to sanitation, and modern telecommunications improve the health and wellbeing of the poor and allow them to better engage with the formal economy and lift themselves out of poverty (see for example BenYishay and Tunstall, 2011). While the extent to which infrastructure development contributes to economic growth has been the subject of academic debate, there is evidence that infrastructure services make a substantial contribution to GDP, generally exceeding the cost of provision (Esfahani and Ramirez, 2003).

The diversity of developing countries is relevant in considering their infrastructure needs and financing capacities. Middle-income countries, for example, have access to international capital markets and may only require technical assistance from the development banks; whereas low-income countries may be more financially risky so multilateral development bank financing and assistance is appropriate. Moreover, some countries, such as fragile, conflict-affected and small island states, may lack even basic access to finance and greater development bank assistance is warranted.