• May 30th, 2020

Create sustainable road infrastructure funding models

SWAKOPMUND - Minister of Finance, Calle Schlettwein says investment in road infrastructure requires significant resources hence sustainable funding models must be developed and prioritised to contain operations within the financial means at all times.

Schlettwein says road usage fees are lagging behind despite the fact that road activity has tremendously increased over the past 10 years, resulting in the need for continued maintenance. However, he says that affordability and sustainability remains a concern in terms of the implementation of road user charges.

He was speaking at the 17th Africa Road Maintenance Funds Association (Armfa), annual general meeting currently underway in Swakopmund.

The association, which was established in 2013 in Ethiopia, brings together 34 stakeholders and policy makers from Africa to deliberate on key issues affecting the continent’s roads and to also find common solutions that will help build, preserve and maintain road infrastructure to promote regional integration and free trade across the continent.

“This becomes evident if we consider the evolution of fees rate changes over time. At the same time, increasing economic activity and the need for connectivity have occasioned the expansion of the road network,” he said.

According to the minister, the user pay principle, which underpins the funding framework for road maintenance brings forth the economic case of road users to contribute to the upkeep of infrastructure.

“Nevertheless, affordability and sustainable concerns arise in the implementation of road user charges as increases in such fees tend to reach affordability thresholds and are not affordable thus making a dent on national and regional competitiveness,” Schlettwein explained.

This, he said, raised the need to match road maintenance function and road user fees adjustment to provide for the expansive network, given affordability constraints.

Taking Namibia as an example, the minister said that road user charges progression in Namibia may be illustrative, however one needs to take into account that vehicle license fee for a light passenger vehicle has increased by more than half over the past 10 years. Also fuel levy due to the road fund has increased by 40 per cent over the same period as well.

“Cross-border charges for light passenger vehicles have almost doubled. While these cumulative adjustments lag the consumer price index in some instances such as the above wield pressure on  consumers, while the, lagging cost recovery directly contribute to the growing road infrastructure maintenance backlog,” he said.

He also explained that the growing road maintenance funding gap and demands for new road development on the other hand, in particular of concern, hence a fine balance between the most critical and strategic road infrastructure from economic and social point of view must be strike.

Eveline de Klerk
2019-03-13 09:54:19 | 1 years ago

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