New report shows how PPPs are not the solution for public service provision, including for education and health

Experts call for World Bank Group to end aggressive promotion of PPPs for public service provision

A new report highlighting how public private partnerships (PPPs) across the globe have drained the public purse and failed to deliver in the public interest will be launched at the Annual Meetings of the World Bank in Bali this week.

History RePPPeated: How public private partnerships are failing has been written by experts across four continents from organisations including the Global Initiative for Economic, Social and Cultural Rights. They expose the negative impacts of PPPs that have often failed to deliver to local communities.

The report shows that multilateral development banks, such as the World Bank have played a leading role in providing advice and finance for PPP projects in different sectors. This is despite the mounting evidence showing that PPPs are expensive, risky and opaque.

Ashina Mtsumi, a Policy and Legal Officer at the Global Initiative for Economic, Social and Cultural Rights who authored a chapter on the controversial education PPP in Liberia, said: “The case study on the Liberian education PPP shows how large commercial actors are not necessarily more effective than smaller local actors or public providers. Large sums were invested into providers, such as Bridge International Academies Ltd (BIA), and returned only marginal gains, which the evaluators determined was not cost effective. This case show that PPPs are not the solution in the provision of public services, and further, that PPPs with commercial actors can be particularly harmful for human rights.”

The report covers 10 case studies from Liberia, Colombia, France, India, Indonesia, Lesotho, Peru, Spain and Sweden. The sectors investigated include education, health, water and sanitation, energy and infrastructure.

Some of the main findings are:

  • All projects came with a high cost for the public purse, and an excessive level of risk for the public sector and, therefore, they resulted in a heavy burden for citizens.

  • Nine out of 10 of the projects lacked transparency and/or failed to consult with affected communities, and undermined democratic accountability.

  • Five of the 10 projects, including the Partnership School for Liberia (PSL), now Liberia Education Advancement Programme (LEAP), impacted negatively on the poor, and contributed to an increase in the divide between rich and poor.

The case study on Liberian Education PPP illustrates how PPPs can be too expensive for the Government to maintain, with a poor value for the costs incurred, as well as a lack of transparency in the procurement of providers and accountability in ensuring equal access for vulnerable and disadvantaged communities, and potential large-scale human rights harm caused by thousands of children being pushed out of schools.

Mr Miamen, Coalition for Transparency and Accountability in Education said: “It is time for the World Bank Group, IMF and other institutions to stop repeating past mistakes and instead support countries to find the best financing method for public services. These solutions should be transparent, environmentally and fiscally sustainable, and in line with human rights obligations. The future of many communities depends on this.”

The report recommends that the World Bank, the International Monetary Fund (IMF) and other public development banks, together with the governments of wealthy countries that play a leading role in these institutions:

  • Halt the aggressive promotion and incentivising of PPPs for social and economic infrastructure financing;

  • Support countries in finding the best financing method for public services in social and economic infrastructure;

  • Ensure good and democratic governance is in place before pursuing large-scale infrastructure or service developments;

  • Ensure that rigorous transparency standards are applied.

GI-ESCR is also currently supporting with other partners the drafting by experts of human rights Guiding Principles on the right to education. These Guiding Principles will clarify how existing human rights law apply to the delivery of social services, including the issue of PPPs, which could help guide international institutions and governments with providing public services in accordance with their legal obligations,

Access the full report available at: www.gi-escr.org/publications/history-repppeated. Photos from the report are available on request.

MEDIA CONTACTS:

Photos of case studies also available on request.

LAUNCH OF REPORT:
The report History RePPPeated: How Public Private Partnerships are failing will be launched at:  World Bank/ IMF Annual Meetings 2018 in Bali Nusa Dua, Indonesia.
Date: Wednesday October 10th from 13.30 to 15:00
Where: Civil Society Policy Forum, Bandung Room.

Notes to editors:

  • Since 2004 there has been a rapid growth in the amount of money invested in PPPs in the developing world. Although the trend has been volatile since 2012, efforts by multilateral development banks to leverage private finance in both emerging and low-income economies have continued — for example, through the “Cascade” approach developed by the WBG, whereby the use of private finance is prioritised over public or concessional finance.

  • This report shows that many projects have been procured as PPPs simply to circumvent budget constraints and to postpone the recording of fiscal costs. Some accounting practices allow governments to keep the cost of the project and its contingent liabilities “off balance sheet”. This ends up exposing public finances to excessive fiscal risks.

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