‘State has to protect its citizens from the profit-hungry private sector. For any public-private entity to be beneficial to society, competent public-sector institutions are a prerequisite,’ says Arif Hasan

WHILE the future belongs to the concept of public-private partnership (P-PP), in Pakistan it is still in its infancy and there will be quite a few teething problems before the trend sets in, says Arif Hasan, architect/planner who has for long been associated with urban planning and development issues. For now, he says, it seems the concept has failed to benefit the poor in developing countries, such as ours, and despite a push for P-PP, poverty is on the increase.

Arif Hasan spoke to Dawn Magazine recently. The following are excerpts from the interview:

Q. How would you define the concept of public-private partnership?

A. When a government institution or a consortium of government institutions and the private sector (including NGOs) come together to provide a service, do business and bring about development in an urban/rural/industrial setting, or even in the field of culture, for that matter, with each partner’s role and responsibility clearly defined, then a public-private partnership is deemed to have taken place.

A contract is charted out and supported within the perimeter of existing legislation, or appropriate legislation is developed for it. The relationship between the sectors is influenced, to varying degrees, by forces both economic as well as political. An unequal relationship between the partners often renders the partnership ineffective, or the dominating actor takes on roles it is not supposed to take, and profits in the process.

When a government has little or no financial resources it always tries to get the communities or the private sector to invest. This has been the case in Pakistan, as political conflicts have never permitted it to stabilize. The byproduct of such an arrangement is a curtailment of government overheads, which also entails what in present day jargon is called downsizing.

Q. When did public-private partnerships actually started making inroads into our system?

A. It is really the result of the liberalization of economy in the late 1980s and the whole of 1990s that promoted the P-PP culture, with our government becoming a signatory to the World Trade Organization and the structural adjustment regimes. The role of the state was seen to be facilitative and protective of the international corporate sector as well as the local private sector. It came to surface after pressure was exerted by the World Bank and the International Monetary Fund.

Q. Was it easy for the state to adjust to the new scenario, from a welfare state to that of one where partnerships were beginning to take place?

A. No, it was not easy then and it is still not easy today. Many upper level government servants and most middle level state functionaries do not know or understand the repercussions of the changes that have taken place. It is difficult to relinquish power, and organizational cultures change over decades. Our bureaucrats have not been trained in the value systems of the new world order. However, in the new scenario, training, discussions and lectures on the importance of the new regimes have been initiated, and that may make a difference a few years down the line.

Q. Is P-PP the most successful model for running the state in present times?

A. Not really. The most successful models in the past have been the welfare state model and the socialist model. The former still operates in most Western European countries. Over there, in most cases, where there has been P-PP, the state institutions are effective enough to protect citizens from profit-hungry private-sector companies. For a P-PP to be beneficial, effective public sector institutions are a prerequisite.

Q. When is P-PP a failure?

A. Only when the state institutions are weak and cannot negotiate with the private sector on the basis of equity and when the interests of local stakeholders are ignored. Most of our institutions have been weakened due to ad-hocism that has been the result of political instability. This, in turn, has made a mockery of the law and the constitution. As a result, partnerships are invariably tilted in favour of the private sector. Also, local stakeholders are seldom, if ever, consulted in these matters.

Major cuts have been made in our social sectors and it is difficult to imagine how the poor will continue to receive basic health, education, water and sanitation if more privatization and more cuts take place. Most P-PP projects and programmes are in the urban sector because that is where large-scale profits can be made at present. In the rural areas, corporate farming, which is on the cards, will also yield large profits at the expense of local farmers.

Q. How can P-PPs be made effective?

A. P-PPs can be made more effective if there is transparency and a space for the interaction of various stakeholders can be created and institutionalized. This means that the project should be advertised and public hearings should be arranged around them. The financial arrangements should be clearly spelt out and accounts regularly published.

If the partnership is a project, then one person should be appointed to head the project from the beginning to the end, and he should be given the authority to run the project without political interference and he should be responsible for everything that is good or bad with it. In our country, every few months persons are transferred and there is no one who can be held directly responsible.

Q. What should be the role of the state in a public-private partnership?

A. It has to have a regulatory role and a more dominant one in planning. Whatever partnerships take place, they should be part of a larger development plan which must have been prepared by state institutions in keeping with the provisions of our constitution, which clearly states that the state is responsible for providing the necessities of life to its citizens. But then again, this can only happen if there are effective state institutions.

Q. What are the spheres in which partnerships can be fruitful?

A. Partnerships can work in the urban setup in areas like water supply, sewage, solid waste and even transport. In the rural areas, such partnerships can work in the paving of water channels to reducing water-logging and salinity.

Q. Have P-PPs always failed in our country?

A. Not always. It fails only when the government is financially weak and its institutions are badly staffed, underpaid, where nepotism and corruption have set in due to political interference and where the planning process is not in place. In such cases, P-PP really means control of the private sector and little or no benefit to citizens and the state itself.

However, there have been instances where partnerships between communities and the state have worked extremely well. The work of the Orangi Pilot Project and the Pakistan Wildlife Fund Programme are examples of this. Here, NGOs, communities and the government agencies have come together to address the issue of services, livelihoods and the environment.

The power of the communities is crucial in making this partnership effective and in favour of the communities rather than that of the NGOs and the government. The Karachi Public Transport Society (KPTS) is another example of an excellent partnership between the government and the private sector where the government has played a dominant role, set the rules and regulations, and conducts monitoring with support from a governing body composed of citizens and stakeholders.

Q. When have the P-PPs failed completely in our country?

A. In the solid waste management sphere in Karachi, all P-PP projects have failed. The reasons are diverse. The private-sector partners were financially weak for the task, and the state authorities were unable to give them the support that was required. In addition, the projects ignored some major socio-economic realities such as the recycling industry, whose interests were not taken into account when developing the partnership.

Q. What is the downside of P-PPs in our context?

A. Master plans have been replaced by un-coordinated mega projects on build-operate-and-transfer (BOT) basis. Companies are happy to deliver such projects, but these turn out to be much more expensive than the government-financed and built projects of a similar nature. Such projects are pushed by a nexus of powerful consultants, international companies and uneducated and unscrupulous politicians with disastrous results for the poor.

Most P-PP and privatization projects in service delivery in the Third World have failed to service the needs of the poorer sections of the population. An example of this is the Manila water privatization. In the First World, too, privatization has not always been successful. For example, after privatization the efficiency and state of the railways in the United Kingdom has progressively declined.

So when we talk of giving a new lease of life to the Karachi Circular Railway on BOT basis, perhaps it would be wise to learn a lesson or two from the mass transit systems in Manila and Bangkok. Their fare structures are far more expensive than the public buses, with the result that the poorer sections do not always use them.