□ Political stability
A primary external factor affecting the development of public-private partnerships () will be the political stability of the country. As with economic stability, investors look for certainty. An unstable political regime - as in Zimbabwe (Box 10.4) - can undermine confidence enough to stall the finalisation of agreements. Political instability brings with it economic uncertainty and financial risk.
It is also true, however, that established have survived political instability and widespread corruption. In Colombia, despite civil unrest at least eight cities have launched concessions/joint ventures with major French water companies. In this case, the existence of a regulatory body in the water sector, and a watchdog for the delivery of basic services, promoted the certainty required, and precedent provided enough comfort to ensure that the citizens themselves were willing to give the private sector the support it needed to ensure reliability and quality of service.
Box 10.1 Political Will Sets the Context for Partnerships | | Expressions of political will | Argentina | Both the Argentinian national government and the provincial government in Córdoba greatly supported municipal . The central government committed itself to generally through a range of supportive policies and reforms. Prioritising economic growth and deficit reduction, in 1989 a new government initiated a series of reforms that included widescale privatisation of state entities. The government anticipated major revenue gains as a result of the sales of assets, and believed that service quality would improve through private sector involvement. While the focus was not on local government, government encouraged municipalities to follow similar pro- policies at local level. Some provincial-level governments then reformed local government legislation to allow for greater decentralisation. In Córdoba, the provincial government gave the municipalities greater discretionary powers, including a capacity to engage with private and non-governmental partners in service delivery. The provincial government also established a private concession for the delivery of water in the municipality of Córdoba, mainly to raise additional revenue through payment of royalties. This support for gave a positive signal about to both private investors and municipalities. | Colombia | formed an integral element of wider state reform in Colombia, and state support therefore added considerable impetus to an enhanced role for the private sector in municipalities. In the midst of extensive state reform and decentralisation in the early 1990s, and pressurised by international financial institutions to adopt market-orientated policies, the Colombian government passed legislation in 1994 that explicitly provided for the involvement of the private sector in public service provision. Furthermore, a national water and sanitation plan was created in 1995 to increase the coverage of water supply and network sewerage by 2010. The achievement of these ambitious targets required institutional reform of the water sector. New legislation in 1994 laid down explicit criteria for efficiency in planning, regulation and supervision. This marked a radically positive attitude towards the private sector. Opting for a market approach, the government acknowledged that the country could not afford the level of public spending needed for building and improving infrastructure. It made clear its belief that private resources were needed to fill the gap. Both private capital and technology were seen as crucial to the institutional reform process, thereby finally opening the door to in public service provision in Colombia. | South Africa | Since 1996, in line with a macro-economic policy to promote growth, investment and employment creation, the South African government has actively encouraged . The Local Government White Paper of 1998 names - along with profit and community organisations - as a distinct service delivery option. Subsequently, new local government legislation and a published policy framework provided a firm commitment and spelt out government's approach. A dedicated unit was also established to advise municipalities on partnership deals, and to promote the concept. The strong commitment to is also embodied in a strategic framework for partnerships at national and provincial levels, with related treasury regulations and another dedicated capacity. There have also been a number of explicit statements in support of partnerships. Extensive consultation took place with stakeholders at policy level, and around projects, with government departments, provincial governments, organised local government, trade unions and consumer groups. Trade union resistance continues to test the government's commitment to . | Source: Nickson, 2001a, 2001b; Goldin and Heymans, 1999 |
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