Following the unrelenting
urbanization and largely unimpressive performance of the public sector in the
provision of infrastructure in many cities in low-income countries, the search
for alternative strategies for environmental services became inevitable. One
obvious consequence of rapid urbanization a growing need for water supply and
waste management and many communities are faced with unprecedented challenges
in managing these. Despite the importance of adequate water supply and waste
management to the environment, the performance of governments in this respect
leaves much to be desired.
urbanization and largely unimpressive performance of the public sector in the
provision of infrastructure in many cities in low-income countries, the search
for alternative strategies for environmental services became inevitable. One
obvious consequence of rapid urbanization a growing need for water supply and
waste management and many communities are faced with unprecedented challenges
in managing these. Despite the importance of adequate water supply and waste
management to the environment, the performance of governments in this respect
leaves much to be desired.
In recent years, there has
been a paradigm shift in infrastructure development and management from a
dominance of the public sector to an emphasis on private sector provision of
services. The World Bank’s policy on the urban sector shifted from
project-based lending in the 1970s to the current emphasis on institutional,
regulatory and financial reforms by the public sector, enabling the private
sector to play a major role in infrastructure development and provision. The public
sector is to enable the private sector through regulatory, institutional and
fiscal frameworks rather than embarking on the direct provision of
infrastructure services.
been a paradigm shift in infrastructure development and management from a
dominance of the public sector to an emphasis on private sector provision of
services. The World Bank’s policy on the urban sector shifted from
project-based lending in the 1970s to the current emphasis on institutional,
regulatory and financial reforms by the public sector, enabling the private
sector to play a major role in infrastructure development and provision. The public
sector is to enable the private sector through regulatory, institutional and
fiscal frameworks rather than embarking on the direct provision of
infrastructure services.
An enabling strategy, which
encourages private sector participation, private-public sector partnerships and
other forms of private participation such as the involvement of non-governmental
organizations (NGOs), communities and households. It was believed that private
sector participation would provide much needed private capital for investment
in infrastructure development, and it has been argued that private involvement
and the associated application of market principles would eliminate
inefficiency, a characteristic of public infrastructure provision.
encourages private sector participation, private-public sector partnerships and
other forms of private participation such as the involvement of non-governmental
organizations (NGOs), communities and households. It was believed that private
sector participation would provide much needed private capital for investment
in infrastructure development, and it has been argued that private involvement
and the associated application of market principles would eliminate
inefficiency, a characteristic of public infrastructure provision.
With respect to water
supply and solid waste, four broad types of private sector participation have
been identified, namely: contracting, concessions, franchises and open
competition. Typically, for contracting, after a competitive process a private
firm may be awarded the contract. Such a firm is usually paid for its services
by a municipal authority, as pre-arranged in the contract. Franchises also
involve a competitive selection process for private firms, who are required to
deposit a performance bond with the government and undertake services.
supply and solid waste, four broad types of private sector participation have
been identified, namely: contracting, concessions, franchises and open
competition. Typically, for contracting, after a competitive process a private
firm may be awarded the contract. Such a firm is usually paid for its services
by a municipal authority, as pre-arranged in the contract. Franchises also
involve a competitive selection process for private firms, who are required to
deposit a performance bond with the government and undertake services.
The private firms recover
the costs of the service directly from customers, although the government may
seek to regulate prices. Concessions entail a long-term contractual agreement
whereby a private firm builds and runs facility. Finally, in open competition,
a license is issued to qualified firms to compete and operate in any part of the
city for the provision of services. These options are designed primarily to
bring private sector capital to enhance efficiency in service delivery.
the costs of the service directly from customers, although the government may
seek to regulate prices. Concessions entail a long-term contractual agreement
whereby a private firm builds and runs facility. Finally, in open competition,
a license is issued to qualified firms to compete and operate in any part of the
city for the provision of services. These options are designed primarily to
bring private sector capital to enhance efficiency in service delivery.
