Fostering sustainable infrastructure: prioritizing governance over financing

The three landlocked countries of Kyrgyz Republic, Tajikistan, and Uzbekistan, with their mountainous terrains and lack of sea access, face unique geographical challenges. Reliable transportation networks and robust energy grids are essential services and catalysts for economic growth, trade, and global connectivity.

All three nations have long relied on international financial institutions (IFIs), foreign direct investments (FDI), and increasingly, public-private partnerships (PPPs) to fund their infrastructure aspirations. However, the primary hurdle standing in their path is the poor governance practices.

The World Bank's Infrastructure Governance Framework paints a sobering picture: on average, nations squander a third of their infrastructure budget due to inefficiencies. The same story unfolds in Uzbekistan, Kyrgyz Republic, and Tajikistan, as highlighted by recent Infrastructure Governance assessments.¹

Beyond Financing: The Governance Challenge

As the demand for modern, reliable services continues to grow, citizens expect to have resilient infrastructure to withstand unpredictable weather-related disasters. However, the development, implementation, and monitoring of large-scale projects often fall short of delivering the expected outcomes. It's not just about securing funds; it's about utilizing them effectively to meet national objectives.

In Uzbekistan, projects funded through state budgets, as well as those supported by IFIs and FDI, are oftentimes developed and implemented independently from one another. This current approach does not always support rigorous scrutiny, and there is potential for greater integration to minimize duplicated efforts and to create closer collaboration.

Projects are typically selected based on funding availability so there is a need for better alignment with national priorities and consideration of crucial factors like climate change resilience. In Tajikistan, recognizing the importance of resilient infrastructure, which is not the case now, presents a chance for progress. 

Comprehensive oversight and quality assurance processes could be enhanced, with projects often proceeding without adequate appraisal or accounting for long-term maintenance costs. In the Kyrgyz Republic, there's room for growth in the incorporation of lifecycle costs to enhance the sustainability of investments.

In all three countries, the emphasis is placed on the initial phases of project development, with a strong focus on planning and selection. When it comes to implementation, there is often a deficiency in the capacity of the respective line ministries to perform consistent financial and physical monitoring. 

The Solution: A Consolidated Public Investment Program

How can the Kyrgyz Republic, Tajikistan, and Uzbekistan overcome these challenges? It is imperative to ensure alignment with national development priorities. Countries should consider establishing a consolidated and streamlined public investment program, heralding a fundamental shift in the way infrastructure projects are identified, prioritized, and executed:

1. Prioritizing necessity over funding sources
   
   Projects should be prioritized based on their strategic significance, economic feasibility, and influence on national development goals.   Emphasizing necessity-based prioritization enables Central Asian nations to achieve a cohesive and efficient delivery of essential infrastructure services. This approach optimizes the use of external funding sources, as projects in line with national priorities are more likely to attract financing from IFIs, PPPs, and FDI, enhancing the country's ability to secure funding for critical initiatives.
    
2. Strengthening downstream project implementation
   
   The contracting agencies and service providers must ensure that infrastructure projects adhere to contract specifications and are executed in a timely and cost-effective manner. Furthermore, they must institute comprehensive monitoring and evaluation processes. Achieving this requires the establishment of detailed implementation plans, clear organizational structures, the development of institutional capacity, adherence to realistic timeframes, and the effective utilization of key performance indicators.

The path to success is clear

Efficient and sustainable infrastructure services are the bedrock of development in the Kyrgyz Republic, Tajikistan, Uzbekistan, and beyond. The establishment of a consolidated public investment program that prioritizes necessity over funding sources will help attract investment and fast-track infrastructure development. By embracing this approach, Central Asian nations can bridge their infrastructure gaps, positioning themselves for greater economic growth, increased connectivity, and an improved quality of life for their citizens.