New horizons: Understanding what the new Road Fund means for road development

The development and maintenance of the road network is of major importance to Gabon in terms of the transport of people and goods, and connecting the mining and agriculture industries in the interior to export points on the coast. Up until 2012, road maintenance had fallen under the purview of the Second Generation Road Maintenance Fund (Fonds d’Entretien Routier de Deuxième Génération, FER 2). However, in August 2012 law No. 0004/2012 created a new institution, the Road Fund (Fonds Routier, FR), bringing together road maintenance and development, albeit with separate budgets. The new institution must now build on past experience and work to improve its predecessor’s performance in order to ensure smooth operation, in turn guaranteeing better road circulation.

NEW BEGINNINGS: The FER 2 was created in September 2006 with the support of international actors, in particular the EU, as an upgrade to its predecessor, the Road Maintenance Fund (Fonds d’Entretien Routier, FER), itself created in 1997. The new organisation sought to address past challenges, namely with regard to the mobilisation and usage of resources. In terms of fund mobilisation, for example, the FER did not always receive much funding from the state. In 1998 and 1999, CFA32bn (€48m) had been allocated to the FER, but the Treasury, which is responsible for transferring the funds, only deposited CFA1bn (€15m) and CFA1.5bn (€22.5m), respectively, eventually driving the institution into debt with economic operators. As for the usage of resources, a lack of clarity in the budget’s structure often made funding for projects difficult, including the construction of new roads.

By comparison to its predecessor, the FER 2 was conceived of as an autonomous institution, embracing a set of principles shared by the African Road Maintenance Fund Association, including autonomy in finances and management, direct fund raising, and regular audits of both a technical and financial character. In this setting, the FER 2 was given responsibility for the administration of funds covering a diverse set of duties, most notably the maintenance of the national road network, road security and support to small and medium-sized enterprises (SMEs), in addition to small and medium-sized industries, and road maintenance, in addition to its own operational expenses. To carry out these and other tasks, the FER 2 had access to three types of funds: allocated resources, own funds and state grants.

However, despite its adherence to autonomy in principle, the FER 2 did not collect the majority of its financial resources. Representing 70% of its funds, the road upkeep charge (redevance d’ssure de la route, RUR) was and is an allocated resource collected by the Ministry of Finance and then transferred to the FER 2 by the Treasury. In addition to the RUR, the FER 2 also received funds from two other allocated resources, an additional payroll tax and a tax on insurance, out of a total 23 fund sources identified in the legislation. As a result, the amount of funds to which the FER 2 had access – limited by the government to CFA33bn (€49.5m) per year – was insufficient.

ROAD FUND: Created in August 2012 under the ratification of law No. 0004/2012, which itself ratified decree No. 0000001/2012 of February 2012, the FR brought with it a key change: the inclusion of new road construction funding under an investment budget. According to the aforementioned decree, the new institution is in charge of two key tasks: administrating funds for financing national road network protection and maintenance programmes; and administrating funds destined for the rehabilitation and construction of the national road network, including developed urban roads and sanitation networks. These tasks are funded by the maintenance and investment budgets.

The type of funding to which the FR has access today is not wholly different from its predecessor’s, although the overall size of its budget has grown in recent years. The FR still has access to state allocated resources and its own funds, as well as state grants and contributions, in addition foreign loans and donations. In 2012, the RF spent CFA90.4bn (€135.6m) on investments and CFA45bn (€67.5m) on maintenance. In 2013, these figures jumped to CFA244bn (€366m) and CFA41bn (€61.5m), respectively. The growth in road investment funds over 2012-13 has been accompanied by a notable raise in maintenance-oriented resources, especially when compared to the lower budgets allocated by the state to this category in previous decades.

Under the FR, maintenance projects should be funded by resources in line with the user-pay principle. This includes the abovementioned RUR, which still represents 70% of total road maintenance funding. Going forward, however, a broader set of funding sources should diminish the predominant weight of this component. The establishment of tolls and vehicle weighing points, as defined in the aforementioned decree, is currently under consideration. Investment-related projects, for their part, should be financed by the budget lines identified for each infrastructure project.

PROJECTS: The FR deals with four types of project: the rehabilitation of existing roads; the construction of new roads; the construction or rehabilitation of road infrastructure, such as bridges (i.e. the Kango bridge); and the cleaning of gutters and watersheds. In 2013, the construction of departmental and residential roads was a priority for the government, given the need to connect Gabon’s large cities among themselves, and also to provide transport access to the new housing projects being built across the country. According to the new institution, budgets of CFA57bn (€85.5m) and CFA98bn (€147m) had been set for these categories. The rehabilitation of existing roads and development of new ones, on the other hand, should represent a total of CFA383bn (€574.5m), of which the goal is to increase road connectivity between Libreville and the country’s provincial capitals. These projects aside, the FR is also working on a number of communication efforts and a quality certification process. The International Organisation for Standardisation 9001 certification process aims to verify the quality of the institution’s management. To this end, the FR hired an internal auditor, who by June 2013 was already carrying it out, with the results expected later in the year.

INTERNATIONAL PLAYERS: International lenders and donors such as the French Development Agency, the African Development Bank and the EU have not directly funded the FR since its creation. Yet this has not excluded cooperation arrangements. The EU, for example, provided €13.75m to road maintenance in Gabon under the Programme to Support Gabonese Road Maintenance from 2006 to 2011. The programme allowed for the reinforcement of FER 2’s administrative capacities, as well as those of SMEs and offices of technical studies. FER 2 co-financed at the time the support to SMEs; the FR should continue doing so under a new initiative co-financed by the EU and the government, the Programme of Support to Sector Governance, representing CFA13.4bn (€20.1m), of which CFA7.4bn (€11.1m) has been allocated to road maintenance.

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