ADB gives USD 900Mn for rural connectivity program in Sri Lanka

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Oct 03, 2017 (LBO) – The Asian Development Bank’s (ADB) Board of Directors has approved financing of up to 900 million dollars for a program that will upgrade Sri Lanka’s road network, a statement said.

The new program targets three lagging provinces—Eastern, Northern, and Uva, as well as a part of Western Province—to complete coverage of all the country’s priority development centers.

About 3,400 kilometers (km) of rural access roads will be upgraded to 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.

It is due for completion in 2027 and will deliver finance in five tranches to 2021, starting with a regular loan of 90 million dollars and concessional loan of 60 million dollars this year.

The government will meet 184.6 million dollars of the total program cost of 1.08 billion dollars.

“Improving Sri Lanka’s poor rural transport infrastructure is key to achieving the government’s development goals, which include generating 1 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 centers 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 percent in 2002 to 6.7 percent in 2012-2013. Much of this progress has taken place in rural areas, where 82 percent of the population lives.

But Sri Lanka still faces several challenges, with poverty in some provinces and districts remaining as high as 20 percent. 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 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 multitranche financing facility was approved in 2014 to upgrade the road network in Central, North Central, North Western, Sabaragamuwa, and Southern Provinces, as well as a part of Western Province.