According to a 2017 research paper titled “An Assessment of Public-Private Partnerships in Land Servicing and Housing Delivery”, the pressure on municipal and central governments to allocate adequate attention and finance to house urban populations, especially the poor has been on the rise.
The research study, undertaken and authored by Faustin Kalabamu and Paul Lyamula acknowledges that some countries, including Botswana, have developed public-private partnerships seeking to “reduce public investments and risks associated with land servicing and provision of housing to the poor”.
The study notes that contrary to common practices, “Botswana has been able to involve private sector firms in land servicing and delivery of projects without explicit contracts. It has instead split delivery processes into phases whereby the government undertakes initial stages and transfers land to private sector firms to complete the process including erection of houses for sale and or rent. Although the strategy may have relieved land housing pressure on state resources, it appears to have excluded vulnerable and low income groups that are often target beneficiaries of state sponsored housing programmes”.
The study authors also acknowledge that although PPPs arrangements have traditionally been deployed to construct or manage public sector infrastructure facilities and services (e.g. water and energy supply, roads and telecommunication), of late several countries have adopted PPPs arrangements in land servicing and real estate developments.
Countries that adopted the PPPs model in land servicing and development include the United States of America, Canada, Australia, united Kingdom, Russia, Bulgaria, India, Pakistan, Thailand, Tanzania, Nigeria, South and Botswana.
Through PPPs arrangements, central and local governments in these countries have been able to finance, construct, own, operate and deliver affordable housing to their people by sharing risks according to predetermined contractual provisions.
More importantly, the PPP approach has been hailed for enabling governments and municipal authorities to deliver low-income housing without using state subsidies to keep rents and or prices low.
The concept of PPPs is an offshoot of the wider enabling approach whose primary objective is to empower communities and reduce public sector burden in providing basic goods and services. The PPPs enable the public sector (as a client or consumer) and the private sector (as a service or facility supplier) to blend their special skills to achieve an outcome that neither could on its own.
It is also explained that under the PPPs approach, the private consortium wholly or partly finances a project and in addition, carries out one or several aspects of project implementation including design, construction, maintenance or operation of the facility while the government contributes land or finance and retains the oversight role. This is in contrast to privatization “where the delivery of the public service is fully transferred to the private sector with little or no government oversight”. Only projects and programmes in which both public and private sector entities have financial commitments , exposure to risk and some benefits or rewards may be included in the PPPs category.
It is generally accepted that PPPs are becoming an increasingly important tool for delivering public services both with regard to infrastructure assets (bridges, roads) and more complex assets (prisons, hospitals, utilities) and PPPs can be viewed in a broad way as covering most interactions between the private and public sectors and in a more narrow way focusing on particular sets of risk-sharing and financial relationships.
PPPs principles will aid decision makers facing the trade-offs between three demands inherent in a PPP project process. First, the public sector must be a prudent fiscal actor. It falls on the decision maker to ensure that the PPP is affordable, that it represents adequate value for money, and that any fiscal risks are limited. Second, the demands for investment from particular sectors such as transportation, health and education have to be assessed prudently against each other so that the projects that are pursued are those that yield the highest return on investment for society as a whole. Finally, decision makers must balance the risk taken by the private sector and those retained by the public sector. It also requires deciding what the appropriate market price is.
The study authors also asset that a key argument for PPPs is that through harnessing the private sector’s expertise in combining the design and operation of an asset, the service can be provided in a more efficient manner, i.e. providing more value for money compared to traditional forms of procurement and production.
It is noted that Botswana has since attainment of independence in 1966 experienced unprecedented urbanization in terms of both numbers and quality of life. The number of towns and cities increased from 3 to 7 between 1964 and 2011 while 25 villages became urbanized and declared planning areas. During the same period, the proportion of people living in urban areas increased from 4 to 64 percent of the nation’s total population. Urbanized villages accounted for 65 percent of the total urban population. Rapid urbanization in Botswana has been attributed to rural-urban migration caused by widespread poverty in rural areas and relatively higher incomes in cities and towns; and high public investments and job creation opportunities in Gaborone and the country’s mining centers.
Rural-urban migration did inevitably lead to overwhelming demand for land, housing and other facilities in urban centers. The demand for housing at the time that the study was undertaken was highest in Gaborone followed far behind by Francistown, Lobatse, and Selibe-Phikwe which resulted in emergence of squatter settlements.
The authors of the study also state that starting the mid 1980s, the demand for housing spilled into villages and settlements surrounding towns and cities, which, in turn, resulted into rapid growth of illegal, unplanned and un-serviced residential plots in peri-urban areas.
It is also appreciated that projects undertaken under the state-led PPPs banner have contributed largely in construction of secondary infrastructure networks (access roads, water supply, drainage and storm water systems and supply of houses. Their contribution has reduced housing shortages and saved public funds. The government has made substantial financial savings with regard to provision of infrastructure services.
“The release of agricultural freehold land for housing, industrial, commercial and community facilities has reduced pressure on Gaborone City Council and filled the gap that the government could not”, states the report.
The study authors however decry that the adoption of the PPs concept in Botswana “has been by default rather than design. The launching of projects now classified under the PPPs banner appear to have been driven by economic diversification and privatization policies rather than the need to share risks and or achieve efficiency. There were neither clearly defined responsibilities, expectations nor agreements on how to obtain finance, supply land, provide infrastructure networks, construct community, operate and maintain PPP projects.
“Worse still, local authorities and utility companies were neither consulted nor engaged in the design and implementation. This challenge was most prominent in private sector led projects. Consequently, local authorities and utility firms were not ready to takeover roads, street lights, refuse collection and other services developed under the banner of the public private partnership because they didn’t plan, budget nor prepare for the”, laments the study.
Most disturbing is the fact that “the projects were implemented without written agreements or legally binding instruments. Consequently, private partners pursued processes that would maximize their profits. All projects benefitted the elite, the rich and, at most, middle income earners. The poor and other vulnerable groups were left out. Even schemes targeting the poor ended up benefitting middle and high income earners. The poor have, as a result, been forced to find accommodation in peri-urban villages or reside in heavily congested but inadequately serviced self-help housing areas”.
The authors also take a swipe at the latest policy titled “Strategy On Private Sector Participation in Land Servicing” which they label as “deeply flawed” as it lays strong emphasis on government acquiring land either through willing-seller-willing-buyer arrangements or through compulsory acquisition.
“The undertaking whereby government acquires land at market prices, provides peripheral infrastructure services and then resells it to private sector partners is uncalled for bureaucratic process. The process is also liable to abuse and corruption. The proposed position of Accounting Officer/team consisting of representatives from a dozen of ministries, departments, utility providers and local authorities will introduce another layer in the land and housing delivery process”, concludes the study.