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Why infrastructure is vital for the SDGs
Zubayer Hossen and Nadeera Sultana
In coming years, balanced social, economic and environmental development will be critical for achieving the 2030 Agenda for Sustainable Development Goals (SDGs). Improved infrastructure is going to be a major prerequisite for this project, since infrastructure acts as a wheel in an economy, especially at its development stage. The SDGs comprehend the importance of better infrastructure for inclusive development and thus emphasise investing in infrastructural development. Specifically, SDG 9—which focuses on industry, innovation and infrastructure—recognises investment in infrastructure as one of the crucial drivers of economic development.
The interconnection among different areas through infrastructural development facilitates trade and socio-economic development and is likely to alleviate poverty through improving the quality of life for the poor. In Bangladesh, with persistent economic growth over the past two decades, infrastructural facilities have seen expansion. A number of mega projects are being implemented with the view to achieve faster economic development. Despite these initiatives, however, Bangladesh suffers from poor infrastructural capacity which may thwart progress. This raises questions about the efficiency of recent investments in mega infrastructural projects and thus reiterates the need for “efficient investment” in infrastructure in order to achieve the SDGs in Bangladesh.
An efficient supply of infrastructure is argued to be conducive to inclusive growth. ‘Infrastructure’ as a term is an all-encompassing concept that provides sector-wide and country-wide benefits and thus, has an impact on the economic, social, environmental and institutional dimensions of sustainable development. Some direct effects are more easily visible—new job opportunities, transaction and communication facilities, construction projects creating the demand for more goods and services, and so on. Less evident benefits take fruit over the long run, both at the regional level and global level. Infrastructure across all sectors delivers services to people; it connects and empowers them. In doing so it helps an economy achieve anticipated economic growth, improve business competitiveness, lower inequality, reduce poverty, and pursue the SDGs and other internationally agreed development goals effectively.
The financing of infrastructure has been a critical element of most economic development plans, i.e. poverty reduction strategies in developing countries since the start of this millennium (Cockburn et al., 2013). Bangladesh, as a developing nation, is no exception. Improving access to infrastructure services will boost our economic activities and produce spill-over effects in its various productive sectors. The potential economic impact can be as high as USD 35.5 billion for Bangladesh by 2030 (UNESCAP, 2017). It will help raise public revenue that can be reinvested into enhancing inclusive growth and achieving sustainable development. Productivity is also likely to improve under various transmission mechanisms. In the short term, aggregate demand is likely to escalate through increased construction activity and the creation of new employment opportunities. In the long term, the supply capacity of the economy is likely to expand due to accelerated economic growth.
Bangladesh has identified access to infrastructure services as a major driver for accelerating growth and empowering citizens in its national development strategies such as the Five Year Plan (FYP), Perspective Plan, and SDGs Financing Strategy. The seventh FYP has classified infrastructure investment as a priority and emphasised on the categorisation of the infrastructure projects, allocation of resources, and timely completion of transformational infrastructure investment. According to the seventh FYP, Bangladesh will need more than five percent of GDP as additional investment in major infrastructure projects per year to sustain growth at a higher level. However, to attain the infrastructure related SDG targets, the additional cost for infrastructural development has been estimated to be 5.67 percent for fiscal year 2030 (GED, 2017). Currently, investment in eight mega infrastructure projects—the Rampal power plant, the metro rail, Padma bridge and rail link, Chattogram-Cox’s Bazar Railway, Matarbari coal power plant, the power grid network, and expansion of the power system network—is a reflection of long run national development strategies. A total of BDT 392.33 billion was allocated for the aforementioned mega projects in fiscal year 2019-20. The total estimated cost for these projects is BDT 2,736.26 billion. By May 2019, 25.61 percent of this estimated cost had been spent (Planning Commission, 2019).
Though Bangladesh is investing in big physical infrastructures, there is a concern about the quality and effectiveness of the investment. Absence of strong implementation, monitoring, and evaluation institutions is enabling corruption. It is creating massive inefficiencies and blocking the full benefits of the investment from taking effect. Besides, Bangladesh has improved transport and water and sanitation, but progress in energy and ICT infrastructures still remains unsatisfactory. In 2015, Bangladesh scored 0.277 and ranked 28 in the Access to Physical Infrastructure Index (APII) among 41 Asia and the Pacific countries (UNESCAP, 2017). One of the key reasons for this poor score is stunted progress in energy and ICT infrastructures.
To reach the sustainable development agenda by 2030, it is high time that Bangladesh realise the importance of efficient investment in infrastructure development. Right priorities need to be set and areas of investment identified. In the future, considering the inclusiveness of development, Bangladesh will require sufficient planned investment in energy and ICT sectors. Most importantly, it will have to ensure transparency and accountability within and across the relevant economic and political institutions.
Zubayer Hossen is Research Economist, SANEM. Email: zubayerhossen14@gmail.comNadeera Sultana is Research Associate, SANEM. Email: nadeerasultana43@gmail.com
PHOTO: STAR