The Role of the Private Sector in the Provision of Basic Services

1. The Role of the Private Sector in the Provision of Basic Services Trends and Issues of Private Sector Participation in Healthcare, Water, and Education in the ESCWA Region

2. Effects of Private Sector Participation • General trend of increasing private sector participation • May complement the public sector • May be associated with a shifted or decreased role of the public sector • May undermine the public sector

3. Public Services as Human Rights • Healthcare, water, and education as basic human rights, necessary components of a full and dignified life. • In many ESCWA constitutions & Internationally • Can the private sector provide human rights? • Personal & public benefits • These services are the building blocks of a strong, prosperous country • Focus on effects on Equity and Quality of services

4. Forms of Private Sector Participation • Many different forms, broadly divided between coordinated private sector participation • Public-Private Partnerships (PPPs) • Public-private collaboration • And uncoordinated forms of private sector participation • Private entities emerge when the public sector does not fully cover the need or demand for a particular service.

5. General Risks of Private Sector Participation • The private sector may not consider externalities • Two Tier System: if private services are not available to all and public services are of a lower quality • Especially because the private sector may pull resources from the public sector • Private providers will typically cater to a urban, higher-income population • Can aggravate inequity

6. General Risks of Private Sector Participation • A higher quality private sector may limit the perceived need to reform the public sector • If public sector alternatives are completely lacking & no state support, households may be forced to accept catastrophic payments Source: World Bank. 2006. Republic of Tunisia, Health Sector Study.

7. General Benefits of Private Sector Participation • Ability to fill in gaps in the Public sector • Conflict and low state capacity • Support innovation & diversity • Especially in education and health care • Allow the public sector to concentrate on fewer roles • As planner, financer, distributor, and regulator • Improve efficiency of service provision • Water systems

8. Health Sector – Unique Issues • A highly technical field, difficult for consumers to know quality of services • Tendency of private providers to over-test, over-treat with brand drugs and technologically-intensive methods • Can drive up health care expenditures • Undermining the efficiency of the healthcare system in Tunisia

9. Private Care vs. Private Expenditures in Tunisia Source: WHO 2006 Country Cooperation Strategy: Tunisia

10. Water Sector- Unique Issues • Most countries Water scarce • Integrated nature of water resources • Significant externalities • Special need for rational management • Significant uncoordinated private sector participation can complicate • Vulnerability of communities without network coverage

11. Education Sector- Special Issues • Need to both expand education system and improve quality/relevance to job market • Issue of private tutoring • Higher private sector participation at lower levels of education • Willingness to shoulder high payments in the hope of high returns Source: World Bank, The Road Not Travelled, 2008

12. Steps to improve benefits & mitigate risks of private sector participation • Improve the legal and regulatory framework for PPPs and private sector collaboration • Bahrain & National Health Regulatory Authority (NHRA) • UAE and Health Authority –Abu Dhabi (HAAD) • Morocco and private water companies • Limit fees of private sector operators • Private schools in Kuwait • Private care in Lebanon World Bank Databank 2012

13. Steps to improve benefits & mitigate risks of private sector participation • Role of international organizations • Can influence national policy & provide resources and guarantee • Unique collaborations between the private and public sector • TVET programs in Tunisia and Egypt • After hour & consultant clinics in Iraq

14. Conclusions When private sector participation is coupled with… • A comprehensive government plan • A robust legal and regulatory framework. • Continual improvements in public sector services and/or measures to expand access to private services Negative effects on equity of services can be reduced • These principles are important regarding both coordinated and uncoordinated private sector participation