Rural Roads

.. CONCEPTS of FINANCE AND ORGANISATION for RURAL ROADS by Dr Gerhard P. Metschies / GTZ

1. Introduction

Step child		Rural Transport is still to be called the step-child of infrastructure provision in Third World countries: nobody really feels responsible, but everybody claims it being of utmost importance. This holds true in particular for Africa, despite the fact that the main focus of international co-operation is directed to this continent since many decades, but many countries in Asia and other parts of the world are concerned too. This state of affairs applies not only to the provision of roads and tracks, but also to the use of appropriate means of transport such as vehicles, ox-carts or bicycles.
Great confusion		In fact, one may talk about a great confusion among professionals, as even basic questions are by no means solved and haven’t found an internationally agreed answer: what defines a Rural Road, from where to where does it lead, who should be responsible, who should take care and pay for it.
Alarming proportions		This great confusion on the fate of this stepchild displays alarming proportions, as more than 80% of the population in Africa and 60 to 70% in Asia are still living in rural areas. In some countries, such as Ethiopia, the situation may even be described as being disastrous, as agriculture forms the productive basis of the entire country – and no decisive results, with the exemption of some trial and error, have been achieved so far.
Two key issues		Alarm clocks aren’t always heard, neither by the responsible governments nor by most agencies of the donor community ; therefore we may now concentrate on the two key issues which are finance and organisation.

2. Survey and Analysis of Rural Roads in Asian and African countries.

Sources of information			One of the main international institutions, dealing with transport and also with rural transport is the UN-ESCAP in Bangkok. Its research results give a valuable overview on the Rural Roads situation in Asian countries. Similarly, for the African continent the SSATP working papers of the World Bank give valuable information.
Responsibilities			They do confirm that Rural Roads may be the organisational responsibility of the central government as in the Philippines, of the provinces as in Thailand or of the districts as in Sri Lanka.
Missing efforts			In Indonesia even "no effort is made to mobilise funds for rural road maintenance". The same applies to Sri Lanka, where no concerted effort is made to mobilise funds for maintenance through voluntary contributions or through taxes on agricultural produce.
Central funding			In Thailand funds come from government sources only and maintenance budgets for rural areas are about 20 to 25 % of the annual road maintenance budget.
Global approach			It should be noted, that in general no effort is made to handle rural roads individually or to establish cost-benefit analyses for them. The funding approach is a global one, mostly based on a per kilometre basis.
Basic needs	Even in policy issues there are different concepts, ranging from a basic needs approach such as in India, where rural infrastructure (including piped water, electricity and rural roads) are provided nearly free of charge, to a more commercially oriented approach, where a productive infrastructure gets the priority before the social infrastructure.
Local stakeholders	The Sri Lanka "village re-awakening scheme" hints to a special problem of rural areas: the often lacking motivation even of local stakeholders or "ordinary local people".
Budget burden	Where rural roads are paid out of general funds, such as in India and in Indonesia, they are a major burden to the government budgets, they amount to 13 % of the overall budget.
Paving of RR	The question, whether rural roads should be paved or not, is controversial: Whereas in China 60% of the rural roads are paved, in Indonesia 55% and in India 34 %, the equivalent figures are in the Philippines and in Iran only 6 % and in Thailand only 2%.
		These different approaches may be found also in the Rural Roads projects of the GTZ in Asia, Africa and Latin America.

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3. The rural roads approach by the GTZ - sector division

GTZ	GTZ has experiences from rural roads project in Nepal, Bangladesh, Thailand, India, Ethiopia, Madagascar, Uganda, Chad and Costa Rica.
Two kinds of rural roads	Rural transport is double faced: first it is a transport chain with one end in the agricultural fields and the other on the local market. But secondly it is also the transport chain from the main highway network up to the local market. It is important to note that both of these rural transport chains should be considered separately, as ownership and responsibility on the one hand and road standards as well as the level of division of labour of the transport systems on the other are different:
Farm-to- market tracks	The "farm-to-market tracks" (or roads in some cases) may have a very low daily traffic, which is done mostly by non-motorist transport. There exists no public ownership for these tracks. The division of labour between the owner of the load to be transported, the owner of the vehicle (or other means of transport) and the owner of the track didn’t yet take place.
Highway-to-market roads	On the other hand the "highway-to-market" roads have higher traffic; they originate mainly at the nearest town and/or at the national highway network. These "highway-to-market" roads are the rural roads in the understanding of the government institutions, as the latter are - from case to case - the owners of them.
Indian Rural Access Programme	The markets are often identical with major villages. The priority-ranking of rural roads projects is made in India through the size of the village. The first 20-year programme for rural roads in India started in 1943 and covered all connections to villages with more than 2 000 inhabitants. The second 20-year programme reached already all villages with more than 1 500 inhabitants. The ongoing third 20-year programme is underway for villages with more than 1 000 inhabitants. This practical approach may be considered a viable Asian approach to the problem.
Market rights ... and market connection rights	But it should be noted also that there are countries - mainly in Africa - where this process of building villages did hardly start and that forced village-access programmes failed. The careful planning and location of new markets and the awarding of market rights to villages is one of the major tasks of the government (mainly of MOLG) and crucial to rural development. Generally speaking, the markets should be in a walking distance (single and return during the same day) of the rural population. Under the auspices of rural transport the official introduction of markets seems to be the key element, as the obligation to connect these markets to the state highway system will become the task of the government, while the access from the fields to the markets remains of the responsibility of the farmers themselves. The development of successful market places to social centres (with school, health station and administrative post) will often follow.
Decentralisation Three categories of local self administration	Experience shows that an effective management of infrastructure services to remote rural areas by central institutions is practically impossible. Decentralisation therefore is a must. At the same time it has to be recognised that the political possibilities for a local administration (i.e. structures to handle public funds) are quite different: In LLDC (with mainly subsistence agriculture) and LDC countries (as in most parts of Africa) local self administration is virtually non-existent, whereby India with the Panchyat system shows a tedious way to introduce local participation in community affairs. In Costa Rica, with its high economic activity (as seen also from the GNP) and its well structured traditional of local organisations, the way for local infrastructure administration is well prepared.

4. The financing concept for rural road maintenance (highway-to-market roads)

Credit worthiness Priority setting	The rural roads are expensive and therefore should become credit-worthy. The concept of credit worthiness of rural roads is basic and especially the question, which road standard is feasible, is based nowadays in most cases on economic considerations. In line with the provision of other infrastructure such as piped water and electricity, roads should also be commercially viable. That means that the size of the market and the market village as well as the size of the rural production of the surrounding area are the main criteria for priority setting in the rural network. The "official" neglect of the connections to smaller villages - as practised so far in India - and of most of the farm-to-market tracks has a major reason: the lack of finance. This means that in some cases the majority of the rural population – as in Ethiopia – will still remain excluded from road services for a long time to come, maybe some generations, if the time horizon of India is to be considered.
Principles of financing Self-financing Versus cross-subsidisation	The financing of rural roads, which basically carry a traffic volume of up to 25 -40 vehicles per day, has to follow other principles than "normal roads", which carry a traffic volume between 100 and several 1 000 vehicles per day. While the road costs for "normal roads" represent on average only 10% of the vehicle transport costs, performed on the road, the road costs for rural roads represent more than 100 % of the vehicle transport costs (cf. Annex A5). In other words: while "normal roads" can be financed by the road users, rural roads are not self-financing, they basically have to be subsidised. This may explain also the reluctance of local and foreign donors to invest in this type of infrastructure; in addition one has to mention the short lifetime of rural roads, which - dependent on the climate - may last only for 5 years, a period which is often considered to be too short for bank financing.
The split of rural roads (figure annex B1)	The degree of subsidisation may depend on the technical standard of the rural roads. Consequences in general are: As they are "unprofitable" anyway, it is useless to carry out cost-benefit analyses for each and every individual rural road. Rural Roads of a country should best be handled globally, i.e. by the government or a central agency. Given the general budget constraints, the Central Government has to decide which sector should bear the cost for the rural roads: the agricultural or the road sector or both of them. Best practice is to split the rural roads also financially into 2 parts: - part 1 as "highway-to market" road to be financed within the family of the highway network, - part 2 as "farm-to-market" tracks to be at the charge of the farmer/land- owner or - in case of a subsidised agriculture - partly of the Ministry of Agriculture (European case).
	5. It may be noted, that this division of responsibilities for rural roads should not hamper the active role and task of the government/MOLG to create new and better markets on appropriate places in the countryside (although the charge of the access to the highway-to-market road shall be covered by the government).
Asset Management for Rural Roads	6. Financing of "highway-to-market roads" is thus part of the National Road Sector. The goal of creditworthiness can only be achieved by a strict approach of asset management: it is an asset management of public property, whose first step is to maintain the asset values of the existing (!) market-to-highway roads. The location of the assets may be seen from the classification chart (Annex B1).
Maintenance cost calculation: the two-cent issue	7. The annual maintenance requirements are listed in a chart, where - in the African "Ruined" example - a yearly maintenance rate of an average of 5% of the replacement value for earth roads is assumed. The detailed calculation (Annex B2-I: Financing Concept) shows that earth roads, although covering 68.5 % of the total road network length, represent only 14 % of the total replacement value and 28% of the total expenditure budget. These earth road maintenance requirements correspond to a general fee of 2 US cents per litre fuel in the African case.
Road revenue calculation	8. The revenue calculation scheme for the roads sector (African case, see annex B2-II) shows how the required maintenance funds are generated by the annual vehicle license fee and the general fuel fee of 10 US cents per litre diesel and petrol. In many countries these amounts are paid into a Road Maintenance Fund established by law. As these funds represent road user fees and no taxes, they should be administered - if feasible - by an independent Roads Authority.
	A graphical summarising overview on "organising ownership and financing of the different road classes by the road fund" is given in annex B3.

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5. Classification and financing of farm-to-market tracks

Agriculture as lead sector from subsidies to economic principles	Farm-to-market tracks and roads serve the needs of the farmers. Their use is dependent on the economic performance of the country (see guidelines of Annex B1) and the level of agricultural productivity. A successful approach for this road category depends on the general approach to the agricultural sector, which world-wide is changing from subsidies to commercial principles (graph in annex C1). This means that the increase of agricultural productivity and production is in the centre of the concept. In LLDC countries a change from the subsistence to the cash-crop economy is necessary, as this would nearly double the harvest output and generate the funds for new means of transport as for instance the bicycle.
Wheel-carts, bicycles, pick-ups	Technical progress lowers transport costs. The traditional head basket transport is the most expensive if hired porters are to be employed, loading of animals cost a third of it and using animal drawn wheel carts may reduce costs again to a third. Transport by wheel-carts may cost as much as bicycle transport, but pick-ups cars are not yet cheaper, but more comfortable on longer distances. Their are price differences, if transport is made by ones own equipment, which is used in agriculture and for the transport to the market as well, if transport is made by third parties on the market-to-highway roads (see "Transport costs per ton x kilometre" in Annex C2). A further reduction in transport costs is only possible by the use of "bulk transport", i.e. consignments of 7 tons and more by medium and heavy truck transport, but which require a completely different and costly infrastructure of gravel and asphalt roads.
Level of mechanisation	Therefore different standards of transport means require different standards for the farm-to-market tracks. There is a general rule that the level of mechanisation of the agriculture should correspond to the mechanisation of transport on the farm-to-market tracks and roads and vice versa. This correlation of equipment standards for agriculture and the subsequent transport to the market is given in annex C3.
Minimum Wages	At the same time the level of use of labour in agriculture may correspond to the level of use of labour for rural roads, especially for the farm-to-market tracks and roads in general, but also for the maintenance of the higher class of market-to-highway roads. Therefore cost calculations of local labour are necessary (by the way: local labourers should be able to return home at the end of the day, as this reduces overall costs considerably). A comparison of minimum wages for different countries has been calculated. There is evidence that the level of pay depends mainly on the general productivity of the country, which may be measured approximately by the GNP per person. It has been found that all over the world so-called minimum wages (which may be applied to local labour in road maintenance) correspond to 40 – 90 % of the GNP per capita per day. This means that, after reaching a certain level the further increase of local wages is only possible through the general economic growth of the country. The overview (Annex C4) may help to identify appropriate wage policies for developing countries on a sustainable basis.
	This sustainable basis for rural transport in general may be seen in the increase of agricultural productivity, the latter being still the core problem of many countries, in particular in Africa.

LIST OF ANNEXESA. Basic Data A1. Organisation and Management of Rural Roads in Asia

A2. Funding of Maintenance for Rural Roads in Asia

A3. Road Network Lengths in Asian Countries

A4. ESCAP proposition of vehicle classification for Rural Transport

A5. Cost Distribution between Road owners and Road users

B. The Market Approach (Highway-to-market roads for motorised transport)

B1. Classification of Rural Roads and Guidelines for Standards ("Farm-to-market" and "Highway-to-market roads")

B2. Financing Concept of Rural Road Maintenance

I. Expenditure Calculation (Asset Value Approach)

II. Revenue Calculation (User Pays Principle)

B3. Summarising Graph on Organisation and Road Fund Distribution of the different Road Classes

C. The Agricultural Market Approach (Farm-to-market roads, mostly for non-motorised transport)

C1. Change of Approach: From Subsidies to Commercial Principles

C2. Transport Cost per ton x km for motorised and non-motorised Transport

C3. Correlation of Mechanisation of Agriculture and Rural Transport

C4. Minimum Wage Calculation (for labour-intensive Road Construction)

D. Further Reading:

World Bank Report TWU11 "Best Practice" in Road Maintenance and Improvement

IFRTD: "Affording Rural Transport" and "Rural Transport: Who pays?"

ANNEX A1 ORGANISATION AND MANAGEMENT OF RURAL ROADS IN ASIA

INDIA	INDONESIA	PHILIPPINES	SRI LANKA	THAILAND
Rural road development is the responsibility of the States. A number of agencies are involved in the development of rural roads. At the centre level, rural roads are looked after by the Ministry of Rural Development.	Rural road development is the responsibility of kabupaten (District) government and centrally administered by Ministry of Home Affairs through its Directorate of Regional Development. Technical advice on the planning, development, and maintenance of rural roads is provided by the Directorate General of Highways, Ministry of Public Works.	Rural road development is the responsibility of the Department of Public Works and Highways.	Rural Road Development has been largely decentralised down to provincial and district levels. Procedures and organisational structures are being worked out.	Rural roads are of the responsibility of the provincial governments.

Conclusions: 1. There is no general practice up to now, how Rural Roads should be organised and managed, centralised or decentralised. Rural Roads are a part of rural infrastructure, which is one of the main topics of the more general issue and process of political decentralisation.

2. It is however evident that the decentralisation of power requires a decentralisation of financial means as well. In Thailand they are centrally financed.

ANNEX A2 FUNDING OF MAINTENANCE FOR RURAL ROADS IN ASIA*

INDIA	INDONESIA	PHILIPPINES	SRI LANKA	THAILAND
Maintenance funds falls grossly short of actual requirements. In some states, an agricultural levy is collected, part of which is used for the construction and strengthening of rural roads. Some voluntary organisations are involved in rural road development and mobilisation of funds for rural roads through voluntary contributions is recommended. No significant progress has yet been made.	The funds available for rural road maintenance are about 50 per cent of the desired amount. No effort is made to mobilise funds for rural road maintenance. Based on the traffic, maintenance priorities are assigned to drainage, routine maintenance, periodic maintenance and up-grading works.	Rural road maintenance funds are allocated on a per km basis and are dependent on a "basic cost per equivalent maintenance kilometre (EMK) of national roads". This cost is adjusted periodically whenever there is a substantial increase in the cost of road materials, labour and equipment usage. For rural roads, the maintenance allocation is 40 per cent of the basic cost per EMK. No effort is made to mobilise funds for maintenance by taxes on agricultural produce. Some times free or voluntary labour is used in some areas when funds are depleted. Starting form 1992, the maintenance as well as the construction of rural roads became the responsibility of local government where the road is situated.	Funds fall short of the actual requirements. Funds are allocated on a linear kilometre basis, but the climatic conditions are taken into account. No concerted effort is made to mobilise funds for maintenance through voluntary contributions or through taxes on agricultural produce.	Maintenance funds come from government sources only. Maintenance budgets for rural areas are about 20 to 25 per cent of the annual road maintenance budget. Voluntary contributions to maintenance are not made, nor are there any moves to mobilise funds through voluntary contributions.

* Source: UN-ESCAP, Study on the Determination of Technical Standards of Rural Road Transport, p.37

Conclusions for Maintenance Funding for Rural Roads:

1. The funding for Rural Roads follows quite different patterns: Sometimes no effort is made to mobilise funds for rural road maintenance, sometimes voluntary organisations are involved in funding. In some cases the agricultural sector pays for it through an agricultural levy.

2. Emerging countries like Thailand or the Philippines allocate funds from Central Government on a per kilometre bases, decentralise the execution of works or allocate 20% to 25% of the national annual road maintenance budget for the Rural Roads.

3. It should be noted that, generally, no effort is made to handle rural roads individually or to establish cost-benefit analyses for them. The funding approach is a global one, sometimes more or less parallel to the political decisions on other rural infrastructures such as clean water or rural electrification.

4. (Therefore funding and - eventually - the cross-subsidisation procedures of other rural infrastructure measures may display possible solutions for the necessitated constant flow of funds).

ANNEX A3 ROAD NETWORK LENGTHS IN ASIAN COUNTRIES

Roads by type and characteristics	India	Indonesia	Philippines	Sri Lanka	Thailand	Remarks
National (km) Provincial (km) Country/Rural (km) Municipality (km) Others (km)	144 832 536 633 811 086 143 537 207 332	12 600 33 500 152 200 25 200 -	26 070 29 174 85 595 15 608 -	10 478 61 881 1 497 1 340 10 461	52 680 6 173 19 506 11 924 86 246
Total road length (km)	1 843 420	223 800	157 447	95 627	176 529
Percentage surfaced Rural road length (km) Percentage of rural to total road length	48 % 1 555 051 84 %	46 % 160 800 72 %	14 % 85 598 54 %	33 % 82 342 86 %	29 % 105 752 60 %	71.2 % (average)

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Conclusions: 1. Rural Roads form a major part of the total road network of a country. According to UN-ESCAP definitions on average 71 % of the total road length are rural roads.

2. The definition of rural roads differs. The Asian ESCAP-study defines the connection from villages to markets or to the nearest road of a higher category as rural roads, but also those which directly serve farms.

Note: In African countries mainly the connection of the local markets to the main highways network (highway-to-market roads) may be defined as rural roads, while - in the case of a subsistence economy - the connection or way from farms to the local markets may not yet be defined as a rural road.

ANNEX A4 ESCAP PROPOSITION OF VEHICLE CLASSIFICATION FOR RURAL TRANSPORT*

Vehicle class	Vehicle type	Description
A	Small goods vehicle	Bicycle, motorcycles, cycle-trailers, oxcarts with pneumatic rollers, donkey carts and other NMT, pick-up: GVW £ 1.5 ton, length £ 6.5m, width £ 2.0m, and light trailer with GVW £ 1.0 t.
B	Light truck	Rigid light truck: GVW > 1.5 and < 3.5 t, length £ 6.5m, width £ 2.3m.
C	Light truck	Rigid light truck: GVW > 3.5 t and < 8 t, length £ 6.5m, width £ 2.3m.
D	Medium	Rigid light truck: GVW > 8 t and £ 12 t, length £ 6.5m, width £ 2.3m. Or farm tractor or traction unit with trailer: GVW > 1.0 t and < 8 t, length £ 7.5m and width £ 2.3m.

Road Categories and Vehicle Classification*

Road category	Maximum axle load (tonnes)	Permitted vehicle classes	Approximate technical road standard
MAL 8	8	A,B,C,D	Gravel road (20 cm base)
MAL 5	5	A,B,C	Gravel load road (10 cm base)
MAL 3.5	3.5	A,B	Drained earth road
MAL 1.5	1.5	A	Earth road (dry weather)

MAL = Maximum Axle Load

* Acc to UN-ESCAP (Study on Rural Road Transport 1991, p.22) and GTZ (Ländlicher Strab enbau in Entwicklungsländern)

Conclusions:

1. There is no general classification of rural roads world-wide and there are no standards for appropriate vehicles for these roads.

2. There are countries (like some Indian States), where the rural population expects that paved roads (or roads for normal trucks and buses) be built for them also (MAL category 8), while others (as in sub-Saharan Africa) may be "content" with being served by non-motorised means of transport or pick-ups, as long as an all-weather connection exists (MAL category 1.5).

3. There are big differences in the construction costs of the road standards as well as its life expectancy (also according to climate/rainfall and terrain). In Asia earth roads may cost:

Category MAL 1.5	costs appr. 15,000 DM/km
Category MAL 3.5	costs appr. 35,000 DM/km
Category MAL 5.0	costs appr. 50,000 DM/km
Category MAL 8.0	costs appr. 80,000 DM/km

Prices in Africa are considerably higher than in Asia

4. Because of its short life expectancy (often less than 4 years) and the involved maintenance problems, lower categories of rural roads are rarely financed by foreign banks.

5. The selection of standards for the rural roads is a most difficult issue and should only be done with the participation of the local road users and general political approval.

ANNEXA5 COST DISTRIBUTION BETWEEN ROAD OWNERS AND ROAD USERS Cost relationship within the highway transport system Vehicle costs versus road costs

How to read this graph:

Example: In the case of a road with an average daily traffic of 800 vehicles, the operation costs of the vehicles make up approximately 88 % of the total system cost (vehicles plus road). The remaining 12 % represents the costs of the road agency, for the conservation of the road as well as the recovery of the original cost of construction. In the case of roads with a greater volume of traffic (which are usually built to a higher technical standard), the road agency will undoubtedly have higher costs; however, the proportion of these costs in the total cost of the system is smaller.

Note 1: The figures used in this graph are the results of research works carried out by the World Bank. They refer to roads which are subject to optimum conservation.

Note 2: The ratio „Road/Vehicle Costs" shows that the cost of National Roads may in fact always be born by the user (as they amount to only 10 %), but with Rural Roads this is no longer the case (as they amount to 100 %-300 % of the vehicle costs). Therefore rural roads in general cannot be considered self-financing, but must be cross-subsidised from the General Road Maintenance Fund (preferably at a lump sum of 25 % of the total means of the Road Fund).

ANNEX B THE MARKET APPROACH (HIGHWAY-TO-MARKET ROADS FOR MOTORISED TRANSPORT) ANNEX B1 CLASSIFICATION OF RURAL ROADS AND GUIDELINES TO STANDARDS ("FARM-TO-MARKET" AND "HIGHWAY-TO-MARKET ROADS")

1. Geographical situation within the market system

2. Situation within the Market Economy: Guidelines for Rural Road Standards

Type of Country Class	Type of Farm-to-market track	Market Place Installation	Type of Highway-to-market road	Type of National or Provincial Highway
LLDC<250$	Footpath, trail	drained	Earth Road	Gravel or Paved
LDC >250$	Earth Road	gravelled	Gravelled Road	Paved
MIC >800$	Gravelled Roadg	gravel	Gravel Road	Paved
EC >3000$	Gravel Road	paved	Paved Road	Paved
IC >12000$	Paved Road	paved	Paved Road	Paved

Note: LLDC (Ethiopia), LDC (India), MIC (Thailand), EC (Costa Rica), IC (Germany)

Note: Farm-to-market-ways should be less than 6-10 km long (farmers may return the same day)

Farm-to-market tracks in LLDC and LDC are mainly for NonMT (oxcarts or bicycle-trailers)
Local markets are the changing points. The Ministry of Local Government is

responsible for establishing new and suitable market places.

ANNEX B2 The Financing concept of rural road maintenance

An African Example (Rwanda)

I. expenditure needs of the road sector based on the asset value approach

Road surface	Length		Asset repla-cement value per km	Total asset repla-cement value	Total net-work value	Annual maintenance requirement		Yearly expenditures road maintenance		*Rule of Thumb for National Road Mainte-nance Fund*		Parti- tioning of fuel fee per litre
	km	%	$/km	million $	%	% of Asset Value	$/km p.a.	million $	%		5		US cents
	(1)	(2)	(3)	(4)=(1)x(3)	(5)	(6)	(7)	(8) = (4)x(7)	(9)		(10)		(11)
Asphalt (surface treatment)	900	7.3	400 000	360	60 %	1.5 %	6 000	5.40	36		65-70 %		7
Gravel	2 500	20.2	50 000	125	20 %	3.0 %	1 500	3.75	25		65-70 %		7
Earth	8 500	68.5	10 000	85	14 %	5.0 %	500	4.25	28		20-25 %		2 see note 8
Urban Road	500	4.0	80 000	40	6 %	4.0 %	3 200	1.60	11		10 %		1
Total	11 000	100	-	610	100 %	2.5 %	-	15.00	100		100		10

1. The value of 1 km of asphalt road (2 cm DST) is 400 000 $ (this is equivalent to 40 kg of gold per km of an African national road!).

2. The total Asset Replacement Value of 610 million US $ is equivalent to 41% of the gross national product of the country.

3. Costs comprise labour intensive routine recurrent maintenance and periodic maintenance. Maintenance for asphalt roads as "Resealing" is needed every 8 years and for gravel roads as "Refilling" is needed every 5 years, as well as spot reconstruction for earth roads twice per year.

4. More than 2/3 of the network are rural roads (earth roads).

5. According to length-men system: 2 men for 3 km (at 1 $ per working day + equipment + supervision).

6. This table is without backlog requirements for previous years and without new construction or rehabilitation.

7. General Road Fund fee in Africa is calculated as 10 US cents (cf. Heggie / WB) per litre.

8. Main result: out of the selling price of fuel of 55 US cents per litre only 2 cents are needed for Rural Road maintenance. This amount is needed for safeguarding the access to the productive centres of the country.

9. How the total expenditures of 15 Mio. $ are covered by revenues generated by the vehicle fleet: see next page.

10. Empirical assumptions according to road surface classes.

11. The total expenditure needs of 15 Mio. $ may also be obtained by generally applying 2,5% of the Asset Value of 610 Mio. $ of the total network.

An African Example: II. Revenue calculation for the road sector based on the Road User Pays Principle (UPP) for Rwanda (with 21 000 vehicles and 10 US cents fuel fee)

VehicleRoad Fund revenue
		$/vehicle	million $	km/vehi-cle/p.a.	US cents/ litre	litre/ 100 km	$/ 100 km	million $	million $
(1)	(2)	(3)	(4) = (2)x(3)	(5)	(6)	(7)	(8) = (6)x(7)	(9) = (2) x (5)x(8)	(10) = (4)+(9)
Passenger Car	10 000	5	0.75	15 000	10	12	.2	1.8	2.55
Small goods vehicles/ minibus	0 000	150	1.50	40 000	10	20	2.0	8.00	9.50
Trucks and truck-trailers	1 000	500	0.50	45 000	10	50	.0	2.25	2.75
Total	21 000	-	2.75	-	-	-	-	12.05	14.80 ^5).

1) Vehicle density is 2.6 vehicle / 1 000 inhabitants at 8.1 Mio. population

2) Average annual licence fee

3) estimated

4) Fuel fee for petrol and diesel

5) Main Result: the total amount of 14.8 Mio. $ per Year, generated by fuel fee and annual licence fee is sufficient to cover the Road Maintenance requirements, including the appr. 4 Mio. $ p.a. for the maintenance of the Rural Roads

ANNEX B3 ORGANISING OWNERSHIP AND FINANCING OF RURAL, NATIONAL AND URBAN ROADS

ANNEX C. THE AGRICULTURAL MARKET APPROACH (FARM-TO-MARKET TRACKS, MOSTLY FOR NON-MOTORISED TRANSPORT)

ANNEX C1 CHANGE OF APPROACH: FROM SUBSIDIES TO COMMERCIAL PRINCIPLES

Markets and Productivity in the Centre instead of social needs

Rural Roads (comprising both the access from the farmer to the rural market and secondly from the rural market to the main highway) seen by NGOs mainly as the "Farm-to-Rural-Market" tracks or roads, but by governments and institutional donors mainly as "Highway-to-Rural-Market" roads.

ANNEX C2 TRANSPORT COST PER TON x KM FOR MOTORISED AND NON-MOTORISED TRANSPORT

Transport costs: An African example (Kenya):

Transport of 100 kg over a distance of 10 km (i.e. indicative cost of 1 ton x km one way)

Means of transport	On "Rural Market-to-Highway Road"	On "Farm-to-Rural Market Way"
	DM per ton x km	DM per ton x km
(1)	(2)	(3)
Transport on head (basket etc.)	6.00 - 10.00 DM/ ton x km ( hired porters, exceptionally as in mountainous terrain )	"Free" family labour on distances up to 4 -10 km
Direct loading on animals (camels , donkeys)	3.00 - 4.00 DM/ ton x km ( hired animals)	1.50 –2.50 DM / ton x km (own animals as used in agriculture)
Oxcart, horse-cart, bicycles	1.20 - 1.70 DM/ ton x km ( hired )	0.80 – 1.20 DM/ ton x km ( own )
Tractor and trailer, Pick - up on tracks	1.20 - 1.70 DM/ ton x km ( hired, if full loading is given)	motorised transport only in advanced agriculture
Truck ( 7 t payload) on earth or gravel road	0.40 - 0.70 DM/ ton x km (hired, if full loading is given)	motorised transport only in advanced agriculture
Heavy Truck on asphalt road	0.20 - 025 DM /ton x km ( hired, if full loading is given)	motorised transport only in advanced agriculture

(data from different studies, 1980)

Note 1: Transport prices in Asia may be considerably, i.e. 50 % lower or even less than in Africa

Note 2: Transport from farm to rural market (3) generally is performed without division of labour between goods owner, transport business man and way owners, while from the rural market on to the highway and town (2) the owners of road, vehicle and goods are different. ANNEX C3 CORRELATION OF MECHANISATION OF AGRICULTURE AND RURAL TRANSPORT

Equipment	Agriculture	Rural road construction and rural transport
I. Subsistence Agriculture	(fields of up to 1 ha per family)
Hoes	Hoes	Hoes, shovels
Wheel barrows, shovels	Harvesting small fields, hoes, shovels, hand trailers	Earth distribution for cross-section of earth
II. Cash Crop Agriculture	(up to twice the area and 2-4 times the harvest of subsistence agriculture)
Oxen	Ploughing by Oxen	Transport by ox-cart
Bicycle	Transport to and from the field by bicycle trailers	Transport to and from the markets, road transport by ox-cart
III. Mechanised and Partly Motorised Agriculture
Tractors	Ploughing (with hired tractors)	Compacting (with rollers) torn by hired tractors or motor-compactors
Tractors and trailers	Transport to and from the field	Transport to and from the market
Motorcycles and motorcycles trailers	Motorcycles and motorcycles trailers	Motorcycles and motorcycles trailers
IV. Industrialised Agriculture	(in Europe on more than 30 ha plots)
Motorisation and automatisation	Fully motorised and partly automated harvesters etc.	Fully motorised road construction equipment and heavy trucks

Conclusions:

The level of mechanisation of rural transport and rural road construction should correspond to the level of mechanisation of the leading productive sector, i.e. agriculture. The same applies to the "appropriate" motorisation: there may be no possibility for an isolated "Alternative" Technology in one sector only.

Bicycles are typical for a cash-crop economy. But the use of bicycles - promoting the use of motorcycles - may drop with the increase of industrialised agriculture.

3. The introduction of bicycles and cycle trailers in rural areas is closely linked to improved agricultural techniques (spades, seeds, fertilisers, pesticides etc.).

4. Relating to human productivity, level of mechanisation, motorisation and the ability to pay for rural roads as well as the means of transport, the categories of subsistence economy, cash-crop and motorised agriculture often and generally correspond to the 3 road categories of earth, gravel and paved rural roads.

ANNEX C4 MINIMUM WAGE CALCULATION (FOR LABOUR-INTENSIVE ROAD CONSTRUCTION
A world-wide survey on key ratios between minimum wages, average wages and GNP per capita, based on OECD, World Bank and GTZ figures ¹

Country	Daily minimum wage for 8 h work	Daily average wage for 8 h work	Minimum wage as % of average wage	GNP per person and per annum	GNP per person and per Day	Minimum wage as % of GNP per per-son per day
	US$	US$	%	US$	US$	%
(1)	(2)	(3)	(4) = (3):(2)	(5)	(6)= (5):360	(7) = (2):(6)
Belgium	53.87	89.93	59.9%	21 200	58.89	91%
France	52.31	76.14	68.7%	22 360	62.11	84%
Netherlands	51.07	96.72	52.8%	20 710	57.52	89%
UK	47.51	----	----	17 970	49.92	95%
USA	40.89	113.02	36.1%	24 750	68.75	60%
Japan	36.98	79.02	46.8%	31 450	87.36	42%
Canada	35.02	91.68	38.2%	20 670	57.42	61%
New Zealand	28.93	54.79	52.8%	12 900	35.83	82%
Greece	20.31	39.51	51.4%	7 390	20.52	99%
Spain	20.13	49.58	40.6%	13 650	37.92	53%
Portugal	14.18	22.12	64.1%	7 890	21.92	65%
S. Korea	8.40	27.36	30.7%	7 670	21.30	39%
Poland	5.96	------	-------	2 270	6.31	94%
Turkey	4.58	16.53	27.7%	2 120	5.89	78%
Hungary	3.64	8.94	40.7%	3 330	9.25	39%
Czech Rep.	3.20	------	------	2 730	7.58	42%
Mexico	3.02	10.94	27.6%	3 750	10.42	29%
Russia²	2.78	4.00	69.5%	2 000	5.50	56%
Namibia	4.00	------	------	1 660	4.63	86%
Uganda	0.42			190	0.53	79%
Nigeria	0.40			310	0.86	47%
Tanzania	0.40			100	0.28	143%

¹Acc. to OECD list (FAZ 23.6.98), GNP 1993 of WB Atlas and figures from GTZ "Road Contractor Promotion and Employment Generation in Africa" Eschborn 1994
² Figures for Russia calculated on the basis of FAZ reports of 29.6.98 and 25.7.98
³As all calculations are in US$, purchasing power corrections don't apply.

Conclusions: 1. There is evidence that in most countries minimum wages are related to the general economic output or productivity, as measured by the country's GNP.

2. If Central European Countries like Belgium, France, Netherlands and UK are taken as a reference, it may be stated that minimum wages per 8 h working day may be fixed at 90 % of the GNP per capita per day of the country. ³

3. The same applies to African Countries, although their GNP level is actually 100 times lower than in European countries.

4. There are exemptions to this rule as the USA and Canada show only figures of 60 %.

5. Some emerging countries like South Korea, Hungary, and Mexico display 40 % or less.

6. The main source of variations within row (7) may be attributed to the UNDP indicators of differences of wage distribution within the individual countries.

CONCLUSION: Minimum wages are fixed at 40 - 90% of the GNP per capita per day.

DISCUSSIONS ABOUT THE PRESENTATION OF DR METSCHIES

The Road Management Initiative RMI and Rural Roads: financing and organisation:

The main question is the ownership of rural roads. Rural roads are not profitable themselves; these roads have to be supported by somebody (like a step-child has to be supported). The main object is to define the procedures and methods to ensure ownership and financing. The local government is supposed to be the appropriate owner of rural roads as the ministry of agriculture has too few resources to cover this infrastructure. The examples of Zambia and Tanzania have shown that the Rural Roads issue may be incorporated into the Road Management Initiative and the Road Fund, which is closely linked to it

Costs of rural transport:

It is very difficult to define what is cheaper in rural transport - it depends on how to calculate it. It has to be based on the real demand and the real situation. (small loads - small distances / bigger loads - longer distances). It was felt that more detailed price information is needed for different countries in order to enable a comparison in labour-divided money economies the actual transport prices (in Us cents per ton x kilometre) for non-motorised and motorised transport.