Hand in hand

FINANCE Minister A.M.A. Muhith recently said that his ministry was poised to prepare three budgets for the upcoming fiscal year. In addition to the already existing revenue and capital budgets, the third one would embrace a public-private partnership (PPP) with a block grant from the government and contributions from the private sector. As reported, 30 projects in agriculture, power, roads and communication are in the preference list.
However, the Oxford dictionary defines "partnership" as a "joint business with shared risks and rewards." Arguably, PPP is not a "quick fix," but should be seen as "a medium to long-term relationship with shared aspirations and for an outcome of public interest on a continuously improving basis." And for many years, partnership has been espoused by government at all levels and of all hues.
The idea of PPP was espoused a century ago in the US and Europe, but got momentum since the late 1980s. From the national level, partnership now works at community level also (e.g. garbage collection and waste disposal schemes). The most important PPP since the 1990s has been in the areas of education, health and transportation.
Muhith's move is a definite departure from the traditional ways of financing public services by the "big brother" government alone. The performance of the public sector in the delivery of services came under heavy attack and, in response, the government privatised some of the poorly performing enterprises.
Privatisation of state-owned enterprises had been a pet policy of the multilateral donor agencies to increase efficiency. Unfortunately, we have very little empirical evidence to console us in this regard. Thus, neither market nor government could turn out to be effective in ensuring efficiency -- both having faced failures.
It is thus no surprise that alternative but innovative ways of meeting resource constraints should be on board. It has possibly become more imperative in a regime of recession, when the government needs huge amount of resources to meet multifarious demands. If put into practice, the proposed joint approach would possibly allow the public sector clients and the private sector suppliers to blend their special skills and achieve an outcome which neither could achieve alone.
A typical example would be a hospital building financed and constructed by a private developer and then leased to the hospital authority. The private developer then acts as landlord, providing house-keeping and other non-medical services while the hospital provides medical services.
The World Health Organisation (WHO) has many projects implemented through the participation of NGOs and the private sector. The Global Alliances for Vaccines and Immunisation is financed 75% by the Bill Gates and Melinda Gates Foundation, which has a permanent seat in the supervisory body.
It is generally agreed that PPP approach offers a long-term, sustainable approach to improving society's infrastructure, enhancing the value of public assets and making better use of tax payers' money.
First, it facilitates the government's capacity to develop an integrated solution to a project. In the conventional procurement programs, projects are broken down due to budget limitation, which causes delays and damages. It is said that the channel tunnel could not have been finished without the participation of the private sector.
Second, it facilitates creative and innovative approaches. The nexus between private and social benefit cost can better be established when both the parties have a stake in a project.
Third, such partnership also reduces the costs and time of implementation of the project. Transparent and accountable as they are, the projects appear to be the most cost-effective. It also trims the time taken for tenders.
The idea of PPP thus sounds sensible. It is quite obvious that the initial phase might witness debates over the perceived pains and pleasures. But once the dust settles and the private sector is assured of the recognition of its due roles in the projects, both the government and the private parties will gain. It is simply a win-win situation provided property rights, procurement process and worthy projects are upheld.

Abdul Bayes is a Professor in Economics at Jahangirnagar University.
Email: address:[email protected].