Privitisation, Public-Private Partnerships and Ooutsourcing: The Challenge To Local Governance

“…privatisation and (Public Private Partnerships) it is argued, can lead to the incapacitation of local government as the fulcrum for development.”

One of the key distinctions being made in local government policy studies is that between local government ensuring service delivery rather than directly providing services. Those who argue for the latter feel that local government should concentrate on encouraging the private sector and engage in regulatory questions, and not directly engage in service delivery. An array of policy options is then presented ranging from that of directly providing a service under competitive conditions to the complete passing over of responsibility to the private sector within a mild regulator}’ framework. The wide range of intermediary possibilities is represented by the term PPP (public-private or public-public partnerships), which introduce a level of innovation in local government service provision.

The enthusiasm for PPP rests on the idea that the public sector is incapable of delivering alone, and that partnerships would assist in releasing resources from the private sector to implement major developmental objectives. Privatisation is represented as a pole at the end of a spectrum of possibilities and, within the present global order, as having a universal logic. Privatisation, it is argued, will lead to the reduction of costs, improved delivery, a stimulus to the private sector, and better managerial practices associated with private corporations. The privatisation strategy has been widely implemented in the UK, Europe, and the US as a means of cutting costs of local government services and utilities.

Although primary reference will be made to South African case studies, the British experience has been crucial and cross-references will be made to examples from that country as representing an extreme development. There are obvious contextual dissimilarities but these represent an important reference point. While there is strong ideological pressure and a new level of advocacy from the World Bank, it is argued that there are also negative spin-offs from privatisation corruption in the tendering and drawing up of contracts, particularly in the US, monopoly in the privatised service, higher user charges, inflated directors’ fees, share options and management salaries, wide-scale retrenchments and anti-union policies.

Published in Transformation: Critical Perspectives on Southern Africa | D. Hemson | 1998