Governments in developing countries have adopted public-private partnerships (PPPs) approach where partnerships between communities and private sector are mediated by the government to take advantage of/ overcome shortcomings of both market and community based approaches. The rationale for the PPP approach emerges from two different viewpoints—one that views community development as a part of the global hegemony of the market, and another that views it as an alternative to the market hegemony. Proponents of the former feel that NGOs and CBOs can help sustain markets by helping the government overcome its resource constraints; while those of the latter find potential in community-based strategies as a means to survive global competition and decide their own development. In the developing country context, decentralization intertwines with PPPs as it advocates that local governments partner with the private sector as well as CBOs to serve local areas and interests, for economic efficiency and to increase political representation.

According to Miraftab, the existing literature on PPPs does not address whether these PPPs can replace the state/ local government’s responsibility to serve the public good, and ensure equity. In this article, she analyzes the environmental conditions and processes that determine the success or failure of PPPs as synergistic relationships between that are meant to benefit all partners, including the poor and disadvantaged.

The article outlines three conceptual issues surrounding equity in PPPs:

1. Definitional imprecision - It is necessary to clarify the constituents of ‘public,’ ‘private’ and ‘community’ in PPPs as this helps define the roles and responsibilities of each partner. Private sector, and communities can mean different actors depending on the context. Identifying which tier of government constitutes the ‘public’ is important to decide who regulates the market and the partnership. Local governments tend to assume a greater responsibility because of their proximity, but lack the required financial and technical capacities.

2. Associated action - For PPPs to benefit the poor in the community, it is necessary to understand the role of the CBOs, origins of the partnership, and relationships between partners to understand power relations that might dictate the process. Partners must have reciprocal benefits and complementary roles for sustainable partnerships. Power imbalances should be replaced with equitable, horizontal power relations through a recognition of socioinstitutional capacities like access to financial, institutional and legal resources.

3. State intervention - In neoliberal times, the private sector and lower tiers of government are expected to develop infrastructure and provide services under state monitoring. To ensure equity, the state should intervene with its powers to level the playing field for all partners, by strengthening those with weak socioinstitutional capacities. This can be achieved through macro-level policies that support interventions at various levels of government and by social movements that can ensure that these supportive policies are enforced.

Decentralization strategies in developing countries include de-concentration, delegation to parastatals, devolution to local governments, and transfer of functions to nonstate actors like NGOs or the private sector. Decentralization can, thus, shift responsibilities downward towards lower tiers of the government, or outwards away from the government; defeating the regulatory role expected of the state. Some arguments see this as a strategy adopted by economically and politically weak states, to transfer responsibility without providing matching financial or technical capacity. In cases where there is devolution of responsibilities but not of budgetary control, local governments have little power of independent decision-making and less influence in partnerships. In some cases where local governments have little financial support from other tiers of government, they have to raise their own revenues by attracting private investors, and through full cost recovery for services. In doing so, they become “market friendly,” and privatize, leading to inequitable outcomes for the poor.

Miraftab uses a South African housing subsidy scheme (a PPP between the poor, private sector and local government to deliver housing for the poor) to illustrate her argument. Under this scheme, a subsidy is paid to the developer (either private sector, local authority or CBO) who purchases land and builds on behalf of a group of qualified disadvantaged households. The policy was criticized as it failed to meet qualitative and quantitative goals, and resulted in unfavorable outcomes for the poor.

The policy was constructed on the premises of the private sector and formal political institutions, with limited representation from grassroots organizations. The state failed to create a level playing field (and equitable, horizontal power relations) for all partners by taking into account their individual capacities and complementarity of roles. It overlooked the fact that developers are driven by profit. It concentrated on reducing risks for private financial institutions that did not lend to the poor people. Despite demands from the grassroots, it did not establish intermediary financial institutions to link grassroots savings with formal institutions. The government also did not provide support to cash-strapped CBOs to build their capacity as non-profit developers and contractors.  The state allowed the stronger members, i.e. the private sector to dictate the partnership leading to poor quality and inequitable outcomes for the poor. Macro-level state policies like GEAR favored neoliberal interventions that strengthened the market, instead of community-based initiatives or local government interventions.

With the introduction of decentralization in South Africa, local governments have greater responsibilities towards delivering shelter and basic services but they are not adequately compensated through intergovernmental fund transfer. This makes them raise revenues through privatization measures like deregulation, tax incentives and sale of public assets to the private sector, and “ring fencing,” where the poor who are unable to pay user fees are cutoff from essential services.

In conclusion, Miraftab argues that the inequitable outcomes resulting from PPPs cannot be solved by focusing on their technical planning and execution aspects alone. The larger policy context determines the state’s will and capacity to intervene with a redistributive agenda and steer the partnership towards equity by building capacities of individual partners, especially the grassroots. In addition to elite interests and macro-level policies, strong social movements also have potential to pressurize the state to play an effective regulatory role. In the absence of state intervention, PPPs might fail to serve the interests of the disadvantaged.