A flagship hospital built in Lesotho using public/private financing with advice from an arm of the World Bank threatens to bankrupt the impoverished African country’s health budget
More than half the country’s entire health budget (51%) is being spent on payments to the private consortium that built and runs the hospital in the capital, Maseru, led by South-Africa-based Netcare, the biggest private healthcare provider in the UK.
Oxfam says the healthcare of the poorest people is at risk, as the Queen Mamohato memorial hospital draws off money that is badly needed for clinics in rural areas. The government is spending $67m a year on the hospital complex, which includes several primary care clinics, in loan repayments and the cost of patient care.
Public/private partnerships to build hospitals have a poor track record even in the wealthy west. PFIs (public finance initiatives) have proved a heavy financial burden on the NHS in England, where 22 hospital trusts in 2012 said repayments were endangering their clinical and financial future and one has since gone into administration because of PFI debts.
Campaign to Stop PPP
A new campaign aimed at reversing the dangerous rush to promote expensive and high-risk public-private partnerships (PPPs) was launched today by civil society organisations from all over the globe.
The campaign’s manifesto – launched during the World Bank and International Monetary Fund annual meetings in Washington DC – demands that western governments, the World Bank and other development banks stop prioritising PPPs over traditional public borrowing to finance social and economic infrastructure and services.
The 152 organisations from 45 countries behind the manifesto point out that “experience of PPPs has been overwhelmingly negative and very few PPPs have delivered results in the public interest.” PPPs often cost more in the long run than conventional public funding, expose governments to financial risk, and can have a disproportionally negative impact on women and children, and undermine democracy, human and environmental rights.
“We are seeing increased promotion of PPPs by the World Bank, G20 and others,” said Maria Jose Romero, Policy and Advocacy manager at Eurodad, the European Network on Debt and Development. “Until relatively recently PPPs were largely confined to developed economies, but now they are being aggressively pushed onto countries in the global south as the answer to development finance shortfalls.”
“This dangerous trend means the very countries which are already most vulnerable to debt and most in need of development aid are saddled with expensive, high risk, undemocratic and unaccountable projects,” said Romero. “PPPs also encourage corruption and bad decision-making because contracts are often negotiated in secret and covered by commercial confidentiality.”
Among the many examples of PPPs which have failed to live up their promises, the campaign highlights
• a hospital in Lesotho which cost three times more than the one it replaced and has swallowed up a quarter of the country’s health budget
• a PPP road linking Brazil and Peru which rose from US$800m to US$2.3bn through corruptly secured renegotiation processes
• the Bujagali Dam in Uganda – a US$860m PPP project which has damaged Lake Victoria and the livelihoods of local people
• a hospital PPP in the UK with an initial private sector investment of £1.149 billion, but which has left the public sector having to pay six times more – £7.194 billion – between 2007 and 2048.
Article first published in http://www.eurodad.org/PPPs-Manifesto