Public Private Partnerships a Form of Privatization

Most governments have adopted public- private partnerships as a way to improve infrastructure and enhance efficient service delivery to their citizens. Public private partnership refers to a system where services offered to citizens are funded and operated through joint partnership between the government of a country and a company or organization from the private sector (Silverstein, 1996 p. 101).

This partnership involves either the government providing the capital for investment from taxes or in other situations, the private organization provides the capital for investment, the second case usually occurs when the terms of the contract are beneficial and strengthening to the private investor. Public private partnership does not just involve the government providing the capital for a certain project, it may also involve the government subsidizing revenue to the contractors for the period defined by the contract, for example through tax breaks. This is done to attract and encourage investment from the private sector.

Theoretically, public private partnership is seen to have the potential of improving service delivery and improving on infrastructure in the countries that adopt it, this is because the intended purpose of public private partnership is to make the projects affordable, deliver service effectively so that the public gets value for its money, attract private investors so as to reduce cases of unemployment and to help ensure that the private investors maintains their integrity as public private partnership is characterized by the two partners sharing the responsibilities and cost of risks that may be incurred.

Writers who support public private partnership argue that the partnership ensures that the services provided are of high quality. Malone (2000, p. 420) argues that public private partnership is a way of ensuring that the government retains control and ownership infrastructure and other public utilities. She explains that the partnership provides an opportunity for effective monitoring, regulation and enforcement of how the services are run by the private contractor therefore ensuring that the public is protected and gets quality services which is quality for their money.

As much as public private partnership has goals of benefiting citizens of a country, it is argued to have some problems associated with it. These problems arise because of the different conclusions reached from the evaluation of the partnership. Most of the writers opposed to the partnership see it as a form of privatization of public assets. It is argued that privatization is for personal interests not beneficial to the public (Hodge).

They perceive contracting out public utilities to be a formal step towards privatization where privatization refers to selling of or transfer of responsibility of public services and asserts to the private sector by the government. Berthelemy et al. , (2004) argues that privatization when compared to public service is not very efficient, especially when there is no mechanism derived to watch its operation. Private companies have been associated with delivery of low quality services in the name of saving money. Literature shows that all private companies aim at reducing cost of operation so as to make maximum profits.

This aspect has resulted to the quality of the product being compromised. Those opposed to public private partnership argue that bringing in private companies to deliver public services could compromise on the quality of the services. According to literature research, service provision to consumers in the private sector is more expensive as compared to the same services being provided by the government. This is regarded to be the problem of involving the private sector in the delivery of services meant to be provided by the government.

The writers opposed to this partnership argue that this results to the services being very expensive for the consumers, especially to the low income earners. Some of these cases have been in observed in countries such the United Kingdom. An example is that given by Hodge (2006, p. 322) where he says that in the Victorian projects cost the treasury more money than was necessary yet the citizens were not told. Contracts that require large amounts of money in terms of labor, equipment and materials are vulnerable and prone to abuse manipulation by politicians, rich and influential people.

This is true especially in countries that have no transparent and democratic procedures of carrying out this policy (Jan-Erik 2000, p. 14- 18). It is argued that the partnership only benefits individuals and not the public as a whole. The system is not well managed, the partnership results into individuals. Hodge, (2004. p. 6) adds that is not easy to lay down policies that will represent the welfare of everyone. He argues that that there are no clear guidelines laid down that can be used to judge collective benefit and common good.

According to Shaoul (2005), few influential individuals take advantage of public – private partnership policies to enrich themselves while the rest of the citizens who are the majority continue to languish in poverty. She criticizes the policy concluding that it is designed to satisfy the interests of particular people and sectors at the expense of the majority of the citizens. The issue of corruption has also been raised. Critics of the public private partnership policy argue that the system is not appropriate in countries that are still struggling with corruption.

They say that countries need to completely and effectively tackle corruption before they believe that such a policy can be successful for the development of their infrastructure. This is true for most countries and especially for Africa where democracy and transparency in the government is yet to be achieved. Information about public private partnerships needs to be made open to the citizens and their suggestions and rejection or approval considered because it is the tax payer’s money that is at risk (Shaoul, 2005).

Citizens need to be involved in the decision making of how the national resources are being utilized. In the event that it is very necessary for the government to subcontract or carry out public private partnership, it is necessary and democratic for the leaders to openly tell the citizens of its inability to continue offering a certain service hence need and plan to involve the private sector in continual provision of the service. This ensures there is open and fair selection of the private firm that is contracted. Involving the public reduces cases of corruption.

Critic authors of the public private partnership say that most governments have ignored the need of involving the public hence act without the authority of the people they represent. This, they argue has led to the erosion of what is termed as political accountability. Hodge (2006, p. 323) advocates for more exposure of the public private partnerships to the citizens. He adds that concealing of the proceedings of the policy to the public is unfair and not democratic to the citizens. He add that the policy is supposed to benefit the citizens who are the taxpayers and no the interest of few individuals in the government.

As much as the authors have criticized the public private partnership, we need also to appreciate the brighter side of the policy. Countries need an extensive and proper infrastructure network that is reliable in order to grow economically. Governments need to provide several services to its citizens; this includes health, transport system, education, amongst others. To be able to do so, governments need adequate funds and a proper system that will enable them to deliver the services fast and efficiently at a lower cost without compromising on the quality. They have thus turned to public private partnership policy for a solution.

The authors who criticize this policy do not address the advantages associated with the policy. They have ignored the fact that this policy has enabled quick and more effective delivery of projects and services. An example is in the construction of roads, research has shown that when traditional method of funding was used, the projects took longer and even remained incomplete as compared to use of public private partnership which made it faster as the cost of operation, risk and responsibility are shared (Rabin 2003,p. 398). The policy has also improved on the quality of the services offered.

This is because the private contractor usually will want to maintain there integrity and will not compromise on the quality. The consumers are therefore able to get value for their money unlike in the traditional system where the government offers services freely or at subsidized cost and has no obligation whatever to improve on the quality (Dennis A et al. , 2003. p. 221). The literature fails to address the issue of how this policy helps to eliminate the problem of unemployment. Public private partnerships have been found to be an efficient tool in the elimination of this vice for countries that apply it in the right way.

The policy encourages private investors both local and foreigners to invest in the country. This creates job opportunities as people have to be employed to work on the projects. Traditional sources of funding such as donations from donor countries and borrowing from the other countries and the World Bank are not enough to address and cover the infrastructure needs and hence require the governments to come up with alternative ways of financing the delivery of services to the citizens and building their infrastructure to enable economic development.

The alternative methods to be adopted need to be cost effective, fast and ensure quality services. Public private partnership has been found to be an effective policy that could deliver this if well managed. Most developed countries for example France in Europe has been able to effectively develop its sewer and sanitation system through this policy this policy. The United States of America are also another good example. The continental railroad was completed through partnership and combined efforts of the federal government and private railroad company’s lot from this policy (Grimsey & Lewis 2004).

Research shows that most third world countries especially in Africa still have problems with funding of essential needs such as insufficient infrastructure in terms of roads and railways. They are also not able to give adequate health and medical services to their citizens. Most of these countries still rely on the traditional methods of funding which are not effective. Is it possible for the governments of third world and developing countries to learn from the developed countries and adopt this policy of public private partnership?

It is possible for the third world and developing countries to learn from the developed countries and adopt this policy so as to find a lasting solution to their financial problems? These countries are most affected by corruption and it is in fact alleged that corruption is one of the major reasons these countries remain poor. The public private partnership can offer a solution to most of the finance problems these countries face if they develop democracy and transparency in their governance.

We have to note that the policy can only be successful and beneficial (common good) to all the citizens if (Spackman 2002, p. 283–301). The governments of the third world countries can only achieve this by completely eradicating corruption, practice democracy and transparency so as to involve the citizens in decision making, lay down the correct regulatory framework and operate by the guidelines and be committed (Mulgan 2006, p. 49-51) .

When all this is in order, they could adopt the public private partnership policy which will provide good opportunities for investors hence development. As much as the critic authors educate us on the problems of the public private partnerships policy, it has several advantages and is worth adopting. The procedures involved in this policy are complex and demanding, but when used in the right way and under the right sectors, they are beneficial to everyone. That is the government, the public and the private sector. Word Count: 1976. References

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& Shabbir Cheema. (2003). Reinventing Government for the Twenty-first Century: State Capacity in a Globalizing Society. Kumarian Press, 2003 Hodge, G (2006), ‘Public private partnerships and legitimacy’, UNSW Law Journal 29(3). Jack Rabin, (2003). Encyclopedia of Public Administration and Public Policy. Marcel Dekker. Jan-Erik. L. (2000). The Public Sector: Concepts, Models, and Approaches. 3rd Edition. Sage. Mulgan, R. (2006). ‘Government accountability for outsourced services’, Australian Journal of Public Administration, 65, no. (2).

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