ADB injects $ 900 m financing to boost rural connectivity program

The Asian Development Bank’s (ADB) Board of Directors has approved financing of up to $ 900 million for a program that will upgrade Sri Lanka’s road network to connect vast rural populations to jobs and services.

“Improving Sri Lanka’s poor rural transport infrastructure is key to achieving the Government’s development goals, which include generating one million jobs, boosting income levels and developing the rural economy,” said Kanzo Nakai, an ADB Senior Transport Specialist. “ADB’s Second Integrated Road Investment Program aligns with the Government strategy to fully connect rural development centres with upgraded rural access roads in an area that is home to about 10 million people.”

Sri Lanka’s economy has grown at an annual average of 6% since 2003, helping to slash poverty from 22.7% in 2002 to 6.7% in 2012-2013. Much of this progress has taken place in rural areas where 82% of the population lives. But Sri Lanka still faces several challenges, with poverty in some provinces and districts remaining as high as 20%. Even in comparatively better off provinces, large segments of the population live close to the poverty line and are highly vulnerable.

Progress is hindered by inadequate transport infrastructure, particularly badly maintained provincial and local roads. While there have been improvements over the last 12 years in addressing trunk road network deficiencies, work on upgrading provincial and rural roads has been relatively slow. Most rural roads cannot provide all-weather access, and parts of the trunk road network are in a dilapidated condition. Providing access to markets and business opportunities will be key to boosting prosperity in rural areas.

Under a first ADB program, an $ 800 million multi-tranche financing facility was approved in 2014 to upgrade the road network in the Central, North Central, North Western, Sabaragamuwa and Southern provinces as well as a part of the Western Province. The new program approved today complements this assistance by targeting three lagging provinces—the Eastern, Northern and Uva, as well as a part of the Western Province—to complete coverage of all the country’s priority development centres.

About 3,400 km of rural access roads will be upgraded to an all-weather standard, while about 340 km of national roads in the four provinces will be improved. Many of the roads are in areas that were affected by the country’s 26-year civil conflict. The program will also improve the capacity of the country’s road agencies for road safety, maintenance, research, design and construction.

The program, which is due for completion in 2027, will deliver finance in five tranches to 2021, starting with a regular loan of $ 90 million and concessional loan of $ 60 million this year. The Government will meet $ 184.6 million of the total program cost of $ 1.08 billion.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth and regional integration. Established in 1966, ADB is celebrating 50 years of development partnership in the region. It is owned by 67 members—48 from the region. In 2016, ADB assistance totalled $ 31.7 billion, including $ 14 billion in co-financing.