'Smart Investment' needed in Central America

Whereas Belize may be one of Central America’s most infrastructure-challenged countries, its need to identify, prioritize and advance critical projects is a common thread woven throughout the fabric of the entire region.

“Central America obviously needs significant investment in infrastructure – and not just investment, but, I would say, smart investment,” said Esteban Diez-Roux, principal transport specialist for the Inter-American Development Bank, which has been providing long-term financing for infrastructure in Latin America and the Caribbean for nearly 60 years. “The countries have to have the capacity to prioritize what they do.”

Diez-Roux, who holds a doctorate in transportation engineering from the University of California, Berkeley, said not only is new development imperative, but also much of the existing infrastructure demands better maintenance and, in some cases, improved management.

“It’s not just a question of infrastructure that’s missing; it’s also a matter of making better use of what’s already there,” said Diez-Roux, who has been working in the region for two decades. “Things are way, way better than they were 20 years ago, but we always have to be striving to improve.”

Lack of appropriate timely maintenance leads to a work backlog and ultimately greater rehabilitation costs, Diez-Roux said. “The first priority is actually getting the maintenance budgets up. On top of that, they need new infrastructure. All of Latin America, and specifically Central America, leaves a lot to be desired in the way of infrastructure.”

In Central America, lack of sufficient port capacity is a significant issue, he said, with a need for more efficient smaller facilities, in addition to a few hub ports that offer deeper drafts and ability to accommodate larger vessels.

The private sector must play a substantial role, particularly in the port sector, where concession agreements and other public-private mechanisms have proven especially effective, according to Diez-Roux.

China is anticipated to remain the biggest player in direct bilateral investment in Central American infrastructure for the foreseeable future, he said.

“The need is substantial,” Diez-Roux said. “We have enormous projects in the highway sector and elsewhere where the needs are very large and much of the materials and equipment need to be transported by ship.”

Photo credit: Shutterstock

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