PICs face special challenges in ensuring access of their citizens to adequate and sustainable infrastructure services. These challenges include:
- Small populations dispersed over wide areas, limiting the scope for economies of scale.
- Extraordinary high costs associated with mobilizing contractors for public works in remote locations. Those costs become reflected in very high per capita donor funded allocations.
- Vulnerability to natural disasters and environmental threats, which increases the cost of sustainable infrastructure.
- Fiscal constraints that limit the ability of governments to fund capital and recurrent costs of infrastructure or to fund subsidies for the cost of infrastructure services.
- Severe capacity constraints include scarce technical expertise and resources in both the public and private sectors.
- Land ownership traditions can severely constrain access to land for public infrastructure.
- The limited size and depth of the local private sector reduces its ability to contribute to infrastructure services in many of the countries.
- The multiplicity of bilateral and multilateral development partners and their differing business practices, in relation to the scale of the economies and populations, impose high transactional costs on PICs in obtaining development support.