Urban Transport in the OIC Megacities
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transport projects. The commitment by the eight MDBs and MFIs (African Development Bank, Asian
Development Bank, CAF – Development Bank of Latin America, European Bank for Reconstruction and
Development, European Investment Bank, Inter‐American Development Bank, Islamic Development
Bank, World Bank) to invest $175 billion in sustainable transportation systems over the coming
decade provides an opportunity to move forward on the pressing issues currently facing the transport
sector. It is a key indicator of shifting priorities, as they consider the long term impacts of climate
change and recognise the public health, environmental, and economic benefits and inclusiveness of
sustainable transport (WRI, 2013; Mitric, 2013).
Nonetheless, there is still much work to be done to develop national level urban transport programs
and policies, clarify and track investments in sustainable transport at the MDB, MFI, national and local
government levels, and leverage domestic and private finance. National governments are vital for
linking their national finance programs with international finance sources to promote a shift to more
sustainable transport. Three sources of financing, capital funds from national and international funds,
private sector, and local, are discussed below. It is noted that the complexity of financing requires
extended analysis and therefore the discussion below is only an effort to summarize the key issues
related to the key sustainability and success factors (WRI, 2013).
To begin with, in order to overcome the longstanding bias towards unsustainable transport, national
governments must establish strong policy frameworks that prioritise sustainable transport project
and program investments along with national funding programs to implement them. The national
funding programs should supplement and leverage MDB/ MFI project and policy funding, while
providing incentives for local governments to plan, evaluate, and implement sustainable transport
projects. The combined impact of national and international efforts for infrastructure, plan and also
institutional development grows local demand for sustainable transport financing and establishes a
virtuous cycle that continuously increases demand for international, domestic, and private financing
for sustainable transport projects (WRI, 2013).
However, national governments or international funding alone cannot fulfil the vast infrastructure
needs in the transport sector. It is key to attract private sector investment and financing by ensuring
a viable regulatory and legal environment, appropriate design and structure of markets, long term
incentives for private investment and protection from investment risks. PPPs have been embraced by
many developing countries that have followed a more proactive approach in attracting funding, but
this has been so far used primarily for financing airports and ports, rather than for sustainable urban
transport used by the majority of people on a day to day basis. In the case of PPPs and concessions it
is necessary that public contribution is appraised following specific principles and procedures in
order to avoid committing to partnerships without clear understanding of costs and benefits.
Essentially, if the private concessionaire is able to exploit consumer surplus of users of new
infrastructure, the public sector should require that the value of external and nonuser benefits be
sufficient to justify the required contribution (WRI, 2013; World Bank, 2002).
In addition to private sector financing, another way for national governments to leverage their own
finances, and the funding received from international sources, is to tap into local funding sources and
develop other innovative financing sources. National governments collect user fees and revenue from
land use, vehicle, income, and fuel taxes. Governments can implement additional instruments to invest
future property value increases into infrastructure improvements, like the innovative financing
scheme on the Mass Transit Railway in Hong Kong. National governments also play a vital role in
Among these are n the
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an The World Bank, 2015).