Opening Remarks for the Participation of Rebeca Grynspan On the Infrastructure and Quality Growth Panel Discussion At the Summer Davos

15 Sep 2011

I would like to center my comments on the need to make infrastructure development work for the poor and vulnerable.

I was positively impressed by the focus of this session since emphasis has been put not only on speed and growth itself, but also on the quality of growth. We have defined at the UN Development Program quality of growth as the one that is both inclusive and sustainable: inclusive means to expand the number of people who participate productively in the economy as well as the number who benefit from its growth. This was precisely the emphasis at the Premier of China Mr. Wen Jiabao's inaugural speech yesterday.

So how to avoid that the new boost to infrastructure b ypasses the need for the small infrastructure that will reach the poor and vulnerable especially in the rural areas? I want to pose this challenge to the panel referring to two groups of physical infrastructure: on the one hand, water, energy, sanitation, transport and telecommunications and in the other schools, health clinics and day cares.

Small-scale community-based infrastructure projects in poor and rural areas are a critical complement to large-scale infrastructure initiatives and often have a more direct impact on the poor.

I also want to state from the beginning that to be successful in doing this we need not only to build the physical infrastructure but also what we call the social infrastructure, that is the development of the institutions, legal frameworks, property rights, regulations including financial regulations and capacities necessary for inclusive, sustainable and dynamic growth.

Very successful schemes, with private-public partnerships have been developed in the emerging markets for physical infrastructure that have effectively foster growth and poverty reduction.

China's remarkable economic success, in itself, offers much evidence in support of this.

But there is also evidence that the elasticity of growth vis a vis poverty is going down, and part of the explanation lies in the persistence of deep inequalities, including geographic, ethnic and gender disparities, as well as environmental challenges.

So, to advance growth that is inclusive, countries need to target their policies and initiatives to stimulate the sectors and areas where the poor work and live, where small scale infrastructure can help a lot.

So we need to first agree on the need to find scalable models for small infrastructure projects since we know these are less profitable, and bear higher transaction costs to be successful.

Constructing physical infrastructure, such as schools, day cares, and health clinics can be a powerful way to reduce disparities when directed to vulnerable populations and poor communities. So can expanding access to safe water, sanitation, and reliable energy. Such services need to reach remote areas and be made available to those who are often excluded, including women, the disabled, ethnic, and linguistic minorities.

In all regions of the world, access to safe drinking water in rural areas lags behind that of cities and towns. In 2008, an estimated 141 million urbanites and 743 million rural dwellers continued to rely on unimproved sources for their daily drinking water needs. (In sub-Saharan Africa, an urban dweller is 1.8 times more likely to use an improved drinking water source than a person living in a rural area).

In 2009 the number of people without access to electricity was 1.4 billion or about 20 percent of the world's population. Some 85% of those people live in rural areas.

This is UNDP's niche. It supports small-scale infrastructure development, such as the construction of water reservoirs in Sudan, and village roads in Laos PDR. Since 1992, UNDP has supported more than 2,700 small energy projects, channeling more than 750 million USD in investments and leveraging an additional 3.25 billion USD in co-financing, mainly from the private sector in almost every developing country of the world. In Nepal, for example, UNDP worked with the World Bank, to support initiatives that have brought electricity to more than 267 poor, remote hill communities; and is now supporting an initiative to scale up access by establishing micro-hydropower systems.

South Africa's initiative to expand access to energy through the construction of solar panels in rural areas, for example, includes training local women in how to repair the panels, reducing the time and costs of maintenance, and building stakeholders' support through their engagement. It is critical that projects allow for community involvement and maintenance of physical infrastructure.

Sustainable is another important part of what we mean by quality growth. Sustained growth is critical for increasing the resilience of countries to external shocks and protecting development gains. Environmental protection is also essential. Depleted or polluted natural resources, increasingly volatile weather patterns, and more frequent natural disasters can impede development progress and even cause reversals, particularly for the poorest people.

Infrastructure that considers inclusive growth and sustainable and green technology growth can be a win win solution.

Social or soft infrastructure

Let me now turn also to an often neglected aspect of infrastructure development that is what we call social infrastructure, or the soft side of infrastructure development.

By social infrastructure I refer to the institutions, regulations, and capacities necessary for economies to function and grow sustainably. This includes property rights, financial regulations, legal frameworks, and value systems, community organization and social and cultural considerations.

So UNDP’s focus has been often to focus on helping governments and other development actors strengthen the countries’ ‘social infrastructure’. For example, in South Sudan, UNDP complemented road building initiatives by helping the authorities establish workable public policies for road safety, including workable traffic rules and incentives for public adherence. For a functioning road system, these ‘softer’ elements are just as important as the roads themselves.

This work is often indirect. For example, in Kenya UNDP helped strengthen the capacity of the Ministry of Energy to review its national energy policy, and establish a regulatory and institutional framework conducive to private sector participation in the clean energy sector. This helped to lay the ground for an impressive 300 megawatt wind energy project.

A comprehensive approach is needed, one that balances the tendency to focus on the speed of growth and physical infrastructure with the inclusive and sustainability elements of quality growth. UNDP supports countries strike this balance through initiatives that strengthen 'social infrastructure' and deliver quality growth. I look forward to hearing your ideas and reflections here today.