AFRICAN ASSOCIATION FOR PUBLIC ADMINISTRATION AND MANAGEMENT

28TH AAPAM ANNUAL ROUNDTABLE CONFERENCE, ARUSHA, TANZANIA

4TH – 8TH DECEMBER 2006

THEME: TOWARDS AN EFFECTIVE DELIVERY OF PUBLIC SERVICES IN AFRICA

TOPIC: PUBLIC-PRIVATE PARTNERSHIP (PPP) INS ERVICE DELIVERY: APPLICATION, REASONS, PROCEDURES, RESULTS AND CHALLENGES IN

TANZANIAN LOCAL GOVERNMENT AUTHORITIES (LGAs)

By: DR. HONEST PROSPER NGOWI ECONOMICS DEPARTMENT, MZUMBE UNIVERSITY

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Abstract

This paper is an extension of the paper that was presented by the author at the AAPAM’s 27th

Annual Roundtable Conference in Livingstone Zambia in December 2005. The author builds on the

paper by discussing the application of the concept of Private-Public Partnerships (PPPs) in service

delivery in Tanzanian Local Government Authorities (LGAs).

He presents theoretical aspects of PPPs and practical/empirical results of a survey of the

application of the PPP concept in seven (7) LGAs in Tanzania – Arusha and Dodoma Municipal

Councils; and Njombe, Muleba, Bariadi, Kigoma and Kisarawe councils. He further makes an in-

depth case study of application of the PPP concept in public service delivery in Morogoro municipal

council partly to identify areas of application, reasons, procedures, results and challenges in

application of the concept thereby drawing important lessons on service delivery improvements

through the application of the PPP concept.

Some policy implications and recommendations for further studies are also identified in the

paper.

Key Words: Public Private Partnerships, Service Delivery Improvement

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1. INTRODUCTION

The public sector has been the main actor in the development process of most countries in

Africa and beyond until the mid 1980s. The sector was the main actor in production and distribution

of goods and services in most economies, especially those that embraced centrally planned economic

policies, like Tanzania. The commanding heights of these economies were directly owned and

managed by the public sector. From the mid 1980s, however, following the winds of change in the

form of many and far-reaching social, political and economic reforms, the role of the public sector in

the development process has substantially changed in many countries. Its role now is mainly that of a

facilitator for the private sector-led economic development and growth. The role of the private sector

in bring about sustainable development in most economies is increasingly been recognized and

acknowledged.

Given the changing roles of the public and private sectors in the bid to bring about sustainable

development in most countries, it is no longer sustainable for the public sector to continue to own,

manage and operate the commanding heights of the economy. Efficient and effective production and

distribution of goods and services is, and should increasingly be left to private sector.

Private sector-led economic growth and development, is generally more efficient (both

productive and allocative efficiencies) and effective. The sector is more dynamic, resilient, creative,

innovative and vibrant than the public one. However, this sector is purely profit-oriented as it

embraces the concept of free interplay of the market forces of supply and demand in the production

and distribution of goods and services. There is therefore likely to be some market failures in the

production and/or distribution of some goods and services. These services therefore will not be

available or if available will only be accessible by the rich who can pay for them.

The use of Public-Private Partnerships (PPPs) in production and distribution of some goods

and services is inevitable for attainment of sustainable development. There is a need therefore to forge

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and promote strong, efficient, effective, sustainable, dynamic and vibrant PPPs so that the private

sector can produce and deliver some goods and services hitherto (and now in most parts of Africa)

produced and delivered by the public sector.

2. ORGANISATION OF THE REST OF THE PAPER.

After this introduction follows the following sections; methodology, theoretical and conceptual

issues, application of PPPs concept in Tanzanian LGAs, in-depth case study of PPPs in Morogoro

municipal council, general challenges in application of PPPs, ways forward in the application of PPPs

in service delivery, summary, conclusions, policy implications and recommendations for further

research.

3. METHODOLOGY

The paper is informed by both the primary and secondary data sources. Secondary data are

based on the review of the relevant literature. Primary data is based on field data collection that was

conducted in Morogoro municipal council using interview guides, questionnaire and observation

methods.

Two research designs have been used to inform the study. The first one is a survey design

whereby a survey was done in 2005 to identify LGAs that are do apply the concept of PPPs in public

service delivery. A total of eight (8) LGAs were identified and out of these one (1) was chosen

conveniently for development of an in-depth case study.

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4. THEORETICAL AND CONCEPTUAL ISSUES

4.1. On Better Service Delivery

The concept of better service delivery in the context of this paper is taken to mean an increase

in both the quantity and quality of services that are delivered (provided) as a result of application of

the concept of PPPs. The increase is mainly captured by increased satisfaction on part of the customers

to whom the services are provided. This is necessarily a comparative issue, where one looks at the

state of affairs in service delivery before – and after application of PPPs.

Methodologically however, it may be difficulty to entirely attribute the increased or decreased

satisfaction in service delivery to the application of PPP. This is because change in satisfaction in

service delivery may depend on many inter-linked aspects, PPP being one of them.

Where as it may be difficulty to entirely attribute change in satisfaction in service delivery, it is

possible however, to explain some observed changes in service delivery in the context of change in the

mode of delivery – from purely public to PPPs in the context of this paper.

4.2. On Private-Public Partnerships (PPPs)

Public - Private Partnership (PPP) is, conceptually, collaboration between public and private

sector organizations in public service delivery. (Commonwealth, 2003; Sohail, 2003; Buse and Walt,

2002; and Nkya, 2000).

According to Gildman et al (1995: viii), four groups of actors are relevant in PPPs.

These are: the Government; Non Governmental Organizations (NGOs), Community Based

Organizations (CBOs); and the private sector.

Gildman et al (ibid: ix) provides various PPPs management systems and techniques.

These are:

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(i) Contracting Out: This is the placing of a contract by a public agency to an

external private company.

(ii) Franchising/Concession: A private partnership takes over responsibility for

operating a service and collecting charges and possibly for funding new

investments in fixed assets.

(iii) Affermage: Public authority controls construction and owns the fixed assets but

contracts out operations, maintenance and collecting service charges.

(iv) Leasing: Making use of equipment/assets without purchasing but paying a lease.

(v) Privatization: Public service is entirely sold to a private partner.

(vi) Management contract: Private organization takes over responsibility for

managing a service to specified standard by using staff, equipment etc, of public

authority.

(vii) Build Own and Operate (BOO): Partnership between public and private sectors

whereby the private firm may build, own and operate the asset/service.

(viii) Build Operate and Transfer (BOT): Same as BOO but the asset/service will be

transferred to the public sector after a period of time.

(ix) Management Buyout (MBO): The management of well run internal functions

negotiates the purchase of that function and becomes a private venture.

(x) Co-operatives: Self-governing voluntary organizations designed to serve the

interest of their members, working in partnership with public authorities.

The most commonly practiced form of PPP is contracting out (Gildman: ibid).

According to Sohail et al (2003) there is no strict PPPs classification that can be made, because

partnership classification depends on the type of services, the nature and strengths of the

partners and the objectives of the PPPs. According to North, (1990); Nkya, (2000); and Sohail,

et al (2003), partnerships are basically institutional arrangements which constitute rules

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defining the relationships that govern the partnerships, roles, responsibilities and accountability

mechanisms (formal or implied). The overall aim of PPP is to meet public needs, which would

not have been realized without joint efforts.

Through PPPs, inter-alia, the public sector will be able to maintain partial ownership and

management of services, avoid accusations of “whole sale” transfer of service delivery to the private

sector and at the same time be effective in its role of political accountability to its constituents.

4.3. PPPs in Delivering Services in Local Government Authorities (LGAs).

The condition of LGAs services provision and availability in Africa is generally poor. Services

provided are in most cases of inferior quantity and quality compared to those in more developed parts

of the world. Where some services infrastructure are in place, their maintenance and repair is

inadequate. These problems are exacerbated by rapid urbanisation in most countries.

Effective and efficient infrastructure and services provision are important in delivering major

benefits in economic growth, poverty alleviation, environmental sustainability and sustainable

development in general in LGAs. The services include water, sanitation, waste management, transport

infrasturcture, health services etc. All these are critical in meeting the needs of people in the LGAs.

Better service delivery is crucial for sustainable growth, development and poverty reduction. It

increases people’s standards of living and contributes to sustainable development, ceteris paribus.

Public sector provision of these services (in this context – delivery of these services by entirely

using LGAs resources) however has proved to be inadequate and unsustainable due to, inter-alia, the

nature of the public sector. Until very recently the sector has been typically characterised by

inefficiency and lack of effectiveness, leading to poor performance. This in turn can be attributed to

many closely inter-linked and self-reinforcing characteristics of the sector like political interference;

unclear objectives; limited operational autonomy; inadequate managerial skills vis a vis technical,

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human, conceptual and design skills; inadequate accountability and transparency; heavy and

cumbersome bureaucracy; poor workers’ morale; inappropriate economic settings; inadequate capital

and lack of appreciation of the free inter-play of the market forces of supply and demand.

Such a sector therefore is inadequate in the whole exercise of effectively, efficiently and

sustainably producing, rendering and improving the needed quantity and quality of goods and

services. The private sector therefore can be seen as the next best and more sustainable alternative.

In the context of production and distribution of goods and services generally, the private sector

is assumed to be more effective and efficient; it appreciates and embraces more the market forces of

supply and demand; is less bureaucratic; more dynamic and vibrant; is the current predominant global

ideology and a viable engine of growth and sustainable development. The sector however is first and

foremost profit motivated. It would not embark in producing and distributing goods and services

where there is no direct economic/pecuniary profitability. For example, the sector will not invest in

some services and infrastructure, however important for the community they are perceived to be, if the

net pecuniary gain is not positive. There will therefore be market failure in the production and

distribution of such services.

The private sector in most of the African countries in general and Tanzania in particular is still

in its infancy. Many African countries embarked on socialist policies after independence. It is only

recently, (mid 1980s for Tanzania) that some of these countries started changing the socialist

ideologies in the wake of the new wave of change to more market- and therefore private sector-led

economy.

On top of the infancy of the private sector in the region, the sector is relatively very small in

size and capital base, especially so for the indegenous, as opposed to the foreign (in form of Foreign

Direct Investments – FDIs) private sector. The former is likely to lack adequate experience, skills,

knowledge and exposures needed to provide and expand the quantities and qualities of goods and

services needed in a sustainable manner.

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One option in facing the challenges above, is to enhance the role of both the public and private

sectors in owning, financing and management/operation of the production and distribution of goods

and services. Consequently, Private Public Partnerships (PPPs) is, and should increasingly be viewed

as a mechanism to provide state functions and LGAs goods and services on a cost effective and

sustainable basis.

Under PPPs, the public sector is publicly accountable and responsible for ensuring that the

needs of different sections of the population are treated equitably. The public sector has the

responsibility to ensure that any contract awarded is actually the best option to reach optimum value

for tax payers’ money. They must make sure that they do not create a private monopoly situation. The

private sector is responsible to its clients, shareholders, and owners.

5. APPLICATION OF PPPS IN TANZANIA

Application of PPPs in Tanzania is still a new phenomenon. PPPs are the products of the

current reforms going on in the country since mid 1980s.The reform that is of great relevance in the

context of this paper is privatization.

According to Pass et all (2000: 220), privatization is the denationalization of an industry,

transferring it from public to private ownership.

As a result of privatization policy in Tanzania, more than four hundred (400) parastatals have

been privatized/diversted. The policy has also made it possible for the application of the PPPs concept.

The main objective of policy reforms is better service to the citizens through combined efforts from

public and private sectors and other stakeholders.

The few known studies on PPPs in Tanzania, have concentrated mainly on solid waste

management. Nkya (2000, 2004) studied PPPs in solid waste management in Dar Es Salaam. Itika (

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2003) studied PPPs in Dodoma in health service delivery, while Kironde (1999) studied urban waste

management in Dar Es Salaam. The studies above therefore have been service-specific.

In what follows, some current pieces of evidence for application of the concept of PPPs in

Tanzania are presented and discussed. The pieces of evidence have been randomly collected in a

survey by the author. The pieces were collected from various sources – mainly the media – in 2005.

Generally, the pieces of evidence potray the application of PPPs in various service deliveries in

various LGAs in Tanzania.

5.1. Case One: Arusha Municipal Council

The application of PPPs in this municipality is in the form of private sector delivery of revenue

collection and cleaning services for the municipality. According to Mwananchi1, (19th May, 2005), the

municipality invited private individuals, companies, cooperatives, institutions and groups registered

legally to offer services as indicated in table 1 below.

1 Tanzanian daily newspaper

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Table 1: Public Services Delivered by the Private Sector in Arusha Municipal Council in

2005/2006

Type of Service Areas Concerned

Revenue Collection at

Markets

- Main Market

- Kilombero whole sale market2

- Sanawari market

- Mjinga market

- Mapunda market

- Kijenge market

- Mbauda market

Revenue Collection at

Bus Stands/Stops

- Stand for big buses

- Stand for small buses

- Taxi and Pick-ups parking areas

- Other car parks

Solid Waste

Collection and

Disposal

- Sombetini Ward

- Sokini Ward

- Daraja II Ward

- Unga Ltd Ward

- Kati Ward

- Themi Ward

- Kaloleni Ward

- Engutoto Ward

- Olorien Ward

2 For the main market and Kilombero market, the service provider would collect tax revenue and user-charge fees but not shop rents.

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- Lemara Ward

- Ngarenaro Ward

Operation of Public

Pay Toilets

- Main Market

- Jogoo House

- Main bus stand

- Kaskazini Toilet

- Kusini Toilet

- Kilombero Market

- Kijenge Round About Toilet

Source: Mwananchi, Thursday 19th, May 2005.

5.2. Case Two: Muleba Council

The council potrays the practice of PPPs in the form of private sector collection of municipal

revenues; printing and car repair services; furmigation; staff transport and supply of stationeries. This

is evidenced in the council’s tender announcement for the 2005/2006 financial year (Majira, ibid).

5.3. Case Three: Bariadi Council

The council practices the concept of PPPs by involving the private sector in public service

production and distribution as shown in table 2 below.

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Table 2: Public Services Delivered by the Private Sector in Bariadi Council in 2005/200

Type of Service Areas Concerned

Procurement Services - Construction equipment

- Office supplies

- Fixture and Furniture

- Spare parts

- Garage services

- Food for council hospital and health

centres

Revenue Collection - Auctions

- Markets

- Hides and Skin

- Traditional healers

Source: Majira, (ibid)

5.4. Case Four: Kigoma Council

The practice of the PPPs in Kigoma council is evidenced in Mwananchi, Friday, 11th June,

2005. The council uses the private sector in production and delivery of various goods and services as

shown in table 3 below.

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Table 3: Public Services Delivered by the Private Sector in Kigoma Council in 2005/2006

Type of Service Areas Concerned

Procurement Services - Car Spare parts

- Printing

- Construction materials

- Car repair and services

- Food supply for Nguruka, Bitale, Buhingu

and Mwangongo health colleges

- Food and charcoal/wood supply for

hospital and health centres

- Repair and selling of computers, faxes,

printers, and photocopy

- Sixtry four (64) different types of

medicines and equipment for hospital and

health centres

Revenue Collection - In sixty six (66) council markets including

Simbo, Nyamoli, Kasuku, Msimba,

Mgaraganza, Kagango, Kigalye, Mkabogo,

Kizenga, Nyamhoza, Nkungwe, and Nguruka

Source: Mwananchi (ibid).

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5.5. Case Five: Njombe Council

The practice of the PPPs concept in Njombe council is in the form of private sector

participation in provision of the services detailed in table 4 below.

Table 4: Public Services Delivered by the Private Sector in Njombe Council in 2005/6

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Type of Service Areas Concerned

Revenue Collection - Njombe town bus stand

- Makambako bus stand

- Uwemba gate

- Idundilanga gate

- Ramadhani gate

- Kidegembye gate

- Idofi gate

- Mjimwema gate

- Lyamkena gate

- Njombe town market

- Makambako market

- Makambako tomato market

- TAZARA area logs and crop cess

Leasing of Council Property - Njombe stand and market toilets operation

- Main Makambako market toilet

- Hazina House renting/leasing

- Njombe town local brew

- Njombe town butcher

- Chauginge butcher

- Stalls in the main market in town

- Council Canteen building

- Tables in Njombe town market

Procurement - Cleaning Njombe town

- Cleaning Makambako town

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- Food supply to council offices

- Food supply to hospital and health centres

- Repair and maintenance of various

machines and equipment

- Printing

Operation of council investments - Radio Television stations in Njombe and

Makambako towns

Building and construction - Building and repair of bridges, roads and

buildings

Sales of council properties - Broker for council properties

Source: Nipashe3, Wednesday, 11th May, 2005

5.6. Case Six: Kisarawe Council

As for Njombe, the application of PPPs in Kisarawe council is evidenced in Nipashe (ibid).

The council make use of the private sector in public service delivery in various ways as documented in

table 5 below.

3 Tanzanian daily newspaper

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Table 5: Public Services Delivered by the Private Sector in Kisarawe Council in 2005/2006

Type of Service Areas Concerned

Revenue Collection - Agricultural and forestry produce (other

than cashew nuts) cess

- Bus stand fee

Procurement Services - Office supplies

- Printing

- Hospital supplies

- Construction and electrical equipment

supply

- Secretarial services

- Fixture and furniture supplies

- Office machines (computer, photocopies)

repair

Source: Nipashe (ibid).

5.7. Case Seven: Dodoma Municipal Council

Dodoma municipal council practices the concept of PPPs by way of making use of the private

sector in various service delivery as evidenced in table 6 below.

Table 6: Public Services Delivered by Private Sector in Dodoma Municipal Council in 2005/2006

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Type of service Areas Concerned

Procurement services - Office supplies

- Machine (computer, photocopy) repair

- Cars repair

- Construction materials

- Fixture and furniture

Revenue Collection - Service levy

- Plying fee

- Open auctions

- Abatoir fees

- Parking fees

- Main Majengo market restaurant fee

- Kizota auction fee

- Sabasaba, Chang’ombe, Chamwino and

Maili Mbili market fees

- Hotel levy

- Main bus stand toilet

- Jamatini toilet

- Old stand (SIDO) toilet

- Bonanza toilet

Waste collection - Waste collection in Dodoma towm

Property lease - Lease of Kizota butcher

Source: Nipashe (ibid).

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Comments and Discussions on The Survey Results

The surveys presented here are solely on PPPs in the context of private sector delivery of

public services in LGAs. The cases are by no means representative of the 120 or so LGAs in Tanzania.

However, they potray the generally observed and emerging trend in the application of the PPP concept

in Tanzania. From the cases therefore, it is evident that the PPP concept is being applied in Tanzania’s

LGAs in their bid to bring about better service delivery, compared to the situation where the public

sector (the LGAs themselves) would be delivering the services.

Several conditions were given to the prospective actors intending to enter into PPPs in

provision of the services above. Among the conditions include: payment of non-refundable application

fee ranging from 30,000 to 100,000 Tanzanian shillings (Tshs)4 for revenue collection at markets,

100,000 Tshs for revenue collection at bus stands and car parks, 30,000 to 50,000 Tshs for solid waste

collection and disposal, 50,000 Tshs for operating the Rock Garden investment and 30,000 to 60,000

Tshs for operation of toilets.

For solid waste collection and disposal, conditions include pocession of knowledge of solid

waste; experience, equipment5 and capacity to collect and dispose solid wastes.

Other general conditions include name, address and applicants’ office location(s); analysis and

breakdown of revenues that one expects to collect, costs involved in revenue collection and amount of

revenue to be paid to the municipalities on monthly basis6; valid business licence; company

registration and Value Added Tax (VAT)/Tax payer Identification Number (TIN) registration;

attachment of a certified banker’s cheque equivalent to three months’ payment of the amount expected

4 Approximate US$ - Tshs exchange rate in September 2006, when this paper was written, was 1 US$ = 1300 Tshs. 5 Bidders have to attach cars ownership cards – in their names, certified by the Tanzania Revenue Authority (TRA) or a lawyer. Equipment, such as cars may be inspected at any time. 6 The amount should be in line with the LGA’s regulations.

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to be paid to the LGA per month to be retained up to the end of the contract period for those who will

win the bids/tenders; cash deposits or bank cheques with a value equal to the value of the service that

one aims to provide or possesion of fixed asset of the said value above or more; attachment of bank

satatement for the last two years; one should show available equipment, number of employees and

their experience; ability to develop and maintain premises where appropriate; and up to three years’

experience in relevant service provision.

The choise of the PPP cases in the LGAs was done by the author just for convinience. It could

be possible to identify some PPP cases in other public sector settings such as in public institutions like

educational institutions, health facilities, prisons, ministries etc where the PPP concept is increasingly

been applied.

6. In-depth Case Study: PPPs in Morogoro Municipal Council

6.1.Introduction

In what follows, the results of an in-depth case study on the application of the concept of PPPs

in Morogoro Municipal Council is presented. The case covers the public services that are being

delivered by the private sector in the municipality; reasons for the municipality to apply the PPP

concept and the impact (change in the quantity and quality/improvement or non-improvement of

service delivery) of using PPPs in the delivery of public services in the municipality and key issues for

successful PPP – based on the experience of stakeholders in Morogoro municipality.

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6.2. Methodology

The case study is based on both secondary and primary data. The secondary data comprise of

the theoretical and conceptual issues presented in section 2 of this paper and the tender announcements

by the municipality as captured by the author from the media. Primary data for the case was collected

by use of an interview guide in July and August 2006. There was two major categories of respondents

for the interviews. The first one was the Morogoro municipal council officials and the second one was

the users of the public services that are being delivered by application of the PPP concept.

6.3. Study areas and respondents

The case study covers several geographical and functional areas and respondents in Morogoro

municipal council where the PPP concept is used. These are summarized in table 7 below. The choice

of functional areas was based on the author’s observation of some PPP elements in those areas. The

respondents were chosen randomly at the study areas. The target was to interview a total of ten (10)

respondents per study area, under the assumption that the number is sufficient to give a general picture

of the situation under scrutiny in the specific study area. It will be seen in the table that more males

were interviewed than females (76.7% against 23.3% of the total respondents). This is based on the

fact that there were more males in the study areas than females. In some study areas, like at the

abbotour and auction there were no females to be interviewed. This is an important gender observation

that may call for further explanation.

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Table 7: Functional and Geographical Study Areas for the In-depth Case Study

S/No Functional area Geographical areas Number of respondents

Males Females

1 Auction Tungi 10 0

2 Abbotour Mtawala 10 0

3 Operation of toilets Small Bus Stand 6 4

4 Cleaning at bus stand Small Bus Stand 6 4

5 Cleaning of markets Main and Sabasaba markets 6 4

6 Revenue collection Markets, auctions and abbotours 8 2

46 14

60

Source: Field data, 2006.

6.4. Findings

6.4.1. Public Services Delivered by the Private Sector

The Morogoro Municipal Council is practising the PPPs concept in service delivery in various

areas and ways. This is evidenced in Majira7, 26th May, 2005 and the findings from field interviews

with the municipal officials. The private sector is participating in public service deliveriey, as detailed

in table 8 below.

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Table 8: Public Services Delivered by the Private Sector in Morogoro Municipal Council

Type of Service Area Concerned Commencement year

Revenue Collection - Abatoirs user fees

- Bus stand parking fees

- Quarrels/mining fees

- Sabasaba market stalls

- Mji Mpya market stalls

- Main market stalls

- Livestock auction fees

- Public toilets user fees

- Hotel levy

- Service levy

2002

2003

2003

2003

2003

2003

2002

2003

2004

2004

Investments in, and operation

of, municipal assets

- Rock Garden recreational

area, along the scenic

Morogoro river falls

Land survey 2003

Sanitation Town cleaning 2005

Source: Majira, Thursday, 26th, 2005, field data 2006.

7 Tanzania’s daily newpaper

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It can be seen from table 8 above the private sector started to deliver most (7 out of 12 or

58.3%) of the public services in Morogoro municipal council in the year 2003. This conforms to what

was described in the theoretical and conceptual issues that PPPs in Tanzania are still in their relative

infancy stage and just starting to take shape. This partly, may make it relatively difficulty for one to

make an adequate evaluation/measurement of the impacts or performance of the PPPs. However, two

years or so of the application of the PPPs concept in the delivery of public services by the private

sector in Morogoro municipal council – as it will most likely be the case elsewhere – are fairly enough

for one to make an analysis of the trends in as far as improvement of service delivery is concerned.

Improvement of service delivery in Morogoro by application of the PPPs concept is dealt with later in

this paper.

6.4.2. Reasons for application of the PPPs concept in service delivery

According to the responses from the municipal officials, the following are the main reasons for

application of the PPPs concept in delivery of public services in Morogoro

i) To improve quality of various services

ii) To increase quantity od various services

iii) To increase revenue collection

iv) To be more cost-effective in service delivery

v) To control unscrupolous staff.

The findings above show that the council aims at improving service delivery to the public by

involving the private sector in the form of PPPs. This conforms to the theoretical and conceptual

issues/framework of this paper, which partly argue that private sector participation in the delivery of

public services aims at improving the delivery of services that were hither-to delivered by the public

sector alone.

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6. 4. 3.Procedures followed to enter into PPP agreements

According to the municipal officials, the main procedures followed by the Morogoro municipal

council in entering into PPP agreements with the private sector include: identification of

services/activities to be undertaken by the private sector (to be out-sourced); conducting cost-benefit

analysis of out-sourcing; discussion within council management team; discussion within various

council committees; final decision (approval or rejection) in full council.

In the event out-sourcing is approved, public tendering process for the agreed activities

follows. The process is guided by the Public Procurement Act, among other regulations. Tenders are

normally flotted and the private sector actors are invited to bid in delivering various services according

to their capacities and in adherence to some specific rules and regulations, part of which are presented

under section 3, subsection 3.2 of this paper.

6.4.4. Performance in service delivery under PPPs

Field findings on the performance of private sector in delivering public services in Morogoro

municipality are summarized in table 9 below. The performance is based on comparison of service

delivery between the period prior to private sector involvement and the period after the involvement of

the private sector under PPPs arrangement.

Table 9: Performance in Service Delivery Under PPPs in Morogoro Municipal Council

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S/N Functional

area

Geographical areas Change in performance

There is

improvement

No

change

Reduced

performance

Do not

know

Remarks

M F M F M F M F

1 Abbotour Mtawala 10 0 0 0 0 0 0 0

2 Operation of

toilets

Small Bus Stand 6 4 0 0 0 0 0 0

3 Cleaning at

bus stand

Small Bus Stand 6 4 0 0 0 0 0 0

4 Cleaning of

markets

Main and Sabasaba

markets

3 4 2 0 0 0 4 0

5 Revenue

collection

Markets, auctions and

abbotours

10 2 0 0 0 0 0 0

6 Auction Tungi

35 14 2 0 0 0 4 0

Source: Field data, 2006.

Key:

S/N = Serial number

M = Male respondent

F = Female respondent

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Description and discussion of the findings.

i) Abboutour service

The main issue of concern for this service was cleanness of the abbotour and availability of

necessary facilities. All respondents reported that there is a general improvement in the delivery of

this service by the private sector. It was noted for example that the bad smell that was experienced in

the past has dissapeared; there are better drainage and light systems and there is a fence around the

facility. All these make it more attractive and user-friendly compared to the situation before

application of PPPs.

The respondents identified areas for further improvement. These include the need to increase

number of toilets as currently there is only one toilet room that is used by about 1000 persons! On top

of this, there is a need to have reliable water supply in the facility and improvement in the sewarage

system and the general sorrounding environment.

ii) Operation of toilets

All respondents reported that there is improvement in as far as cleanness of toilets is

concerned. The bad smell that was normal when the municipal council was operating the toilets is no

longer there. The toilets and bathrooms are more confortable and user-friendly to use.

iii) Cleaning at bus stand

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All the respondents reported that the cleanness of the bus stand has improved since the private

sector began to deliver the service. Cleaning is done twice a day – in the moring and in the afternoon;

small traders in the bus stand have been given some awareness on the need to keep their premises

clean and facilities towards this have been installed in form of dust bins.

iv) Cleaning of markets

It was reported that the cleaning of the main (Morogoro/Madaraka) market is done by both the

municipal council and the private sector. The private sector cleans the market and the municipal

council is responsible for transporting the collected waste to dumping places. Respondents were of the

opinion that the municipal council has a relatively low ability to perform its duty.

Out of ten (10) respondents, eight (8) reported that there is improvement in the cleanness of the

Sabasaba and main (Madaraka(Morogoro) markets after the private sector started delivering the

service. One (1) respondent reported that there cleanness of the markets has not changed even after

private sector delivery of this service began, while another one did not know whether the cleanness has

increased or not.

The respondents were of the opinion that the Sabasaba market has poor plans and there is poor

drainage and sewarage systems, while the main market is over-populated and is poorly located

especially during the rain season.

v) Revenue collection

All respondents reported that there is improvement in the revenue collection services after the

application of the PPPs concept in Morogoro municipal council. The municipal officials reported for

example that revenue collection from various sources has increased by between 75% and 100% as a

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result of using private sector revenue collectors. They also reported that there is more timely collection

and submission of revenues and greater predictability, on part of the municipal council, as to when and

how much revenue will be collected. This makes it easier for planning and execution of various

activities that depend on the collected revenue.

Revenue payers reported an improved revenue collection procedure after application of PPPs.

For example, there is no longer use of force, the revenue collection procedures are now well known to-

and accepted by the payers. Applicable payable rates for various items have been made clear by the

private sector revenue collectors, as narrated by one respondent;

”…we know for example that for a bag of beans of about 200 kilogrammes we have to pay 200Tshs in

revenue, for one batch of dried fish we are supporsed to pay 500Tshs, owning a table in the market

costs 6000Tshs per month and payable cleaning fee per day is about 100Tshs. The private sector

revenue collector has made all these things clear to us. This was not the case when the municipal

council was collecting revenue on its own”

vi) Auction

All respondents indicated that there is no change in the animal auction facility even after

application of the PPPs. The services (mainly cleaning) delivered by the private sector are as poor as

they were when the public sector was delivering them. The main reason is lack of water and fence in

the facility. Due to lack of water, there is no cleanness in the auction and the lack of fence cause lack

of protection for the animals. It was also reported that the auction lacks security.

It is the author’s opinion that the lack of improvement in service delivery at the auction may be

the responsibility of both the private sector and the municipality. This will mainly depend on the terms

of the contract agreed by the two. The contract is supporsed to explicitly define who of the two parties

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will install such facilities as water, fence and provision of security. It was beyond the scope of this

paper to scrutinize the contracts.

vi) Municipal gardens/round abouts

It is the author’s observation that there has been a tremendous improvement in the management

and maintenance of gardens in Morogoro municipal council six around March 2006. A private sector

service provider has turned the once bushy and bad-looking gardens – and especially at all the round

abouts – into attractive and scenic gardens.

6. 4. 5. Conclusions on Application of PPPs in Morogoro Municipal Council

From the field findings presented under section 4.4.4 above, it can be seen that in general

terms, there has been an improvement in service delivery since the private sector began to play its part

in form of PPPs. It can be concluded therefore that PPPs in Morogoro municipal council has resulted

into better service delivery. However, there are some few areas for improvement from both the private

sector and the municipal council. Some of these areas for improvement are presented as challenges in

what follows.

6.4.6. Challenges in the Application of PPPs to Deliver Public Services in Morogoro

A number of challenges are encountered by the key actors in service delivery using the PPPs

model. During the field work in Morogoro the following challenges were identified;

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i) Parties delay in fulfillment of contractual terms. This has been experienced in the case of

revenue collection by the private sector where the collectors delay in remitting the collected

revenues

ii) Failure to deliver the required services in the provided duration and specification. This has

resulted into contract councillations and leads to delays and problems to replace the service

provider.

The challenges above partly potray low capacity on the part of the private sector service

delivery. It is possible however that the municipal council is also playing a part in the private sector’s

inability to honour contractual terms by not playing its part of the contract adequately. This has been

reported in some cases like in the cleaning and operation of the main market, auction and aboutour.

6. 4. 7. Key Issues in Application of PPPs to Deliver Public Services

Among the key issues that determine successful application of the concept of PPPs for service

delivery in Morogoro municipal council include the following (in descending order of importance);

i) Availability of private sector actors with the needed capital to deliver the services

ii) Ability and willingness of the parties to follow and honour contractual terms

iii) Transparency in transactions between the parties

iv) Private sector knowledge in the service to be delivered

v) Private sector experience in delivery of a given service

As seen from the finding above, private sector availability is a pre-condition for application of

the PPPs concept in any service delivery. When available, the private sector actors should have a

certain critical minimum quantity of capital with which to delivery part or all of the services. This is

reflected in most of the PPPs tender conditions identified in the survey of the seven LGAs in this

paper.

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7. GENERAL CHALLENGES IN APPLICATION OF PPPS

Based on the general literature review, the survey of the seven LGAs in Tanzania and the in-

depth case study of Morogoro municipal council, there are a number of general challenges that are

likely to be encounterd by stakeholders in the efforts to apply the PPP concept in delivering public

services, especially developing countries. Some of these challenges are identified and disccussed in the

Tanzanian context in what follows.

7.1. Newness of the PPPs Concept

As indicated in the literature review in this paper, the PPPs concept is still new and in its

relative infancy stage of development in Tanzania. This brings a number of challenges when it comes

to the use of the concept. Challenges include proper understanding of the concept and its

operationalisation by those in various positions in the public and private sector; lack of the needed

support, commitment and endorsement by various stakeholders in a PPP arrangement, partly as a

result lack of the needed readiness to change and depart from the orthodox ways of doing things.

All these challenges may lead to opposition in the use of the concept. Where it is applied it may

be wrongly applied hence failures.

7.2. Private Sector Related Problems

There are some characteristics of the private sector in Tanzania that pose some challenges in

the applictaion of the PPP concept.

These include: the infancy of the sector. The sector is still taking shape in Tanzania, given the

socialist past of the country that dominated up to mid 1980s. Private sector mentality and philosophy

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in Tanzania is still in its early stages of development. The needed agressiveness, dynamics and

vibrancy in the sector is still limited and non-optimal. The socialist, public sector dominated economic

philosophy is still lingering in some people’s minds. These include people in some key policy and

decision making and implementation positions.

Another issue is the domination of the informal sector in the private sector in Tanzania.

Informal sector dominates the private sector in Tanzania. Most economic activities in Tanzania

(arguably up to 60%) take place in the informal sector where businesses are not legally recognized due

to lack of registration for various reasons. (See Ngowi:2005). As a result of this, it may become a

challenge for the public sector to find qualified private sector partners to enter into a PPP

arrangements especially where that private partner has to be legally recognized for, inter-alia,

contractual purposes. (See some of the conditions that have to be fullfilled before entering PPP in the

cases above).

Due to these and other private sector characteristics therefore, it may be difficulty to properly

apply the PPPs concept in Tanzania. It becomes a challenge for example, to get the needed quantity

and quality of private sector service providers in various sectors and geographical regions, especially

in the relatively remote, rural and underdeveloped parts of Tanzania.

7.3 Public Sector Related Problems

The nature of the public sector in Tanzania poses some challenges in proper application of the

PPPs concept for suistainable development. The sector is typically characterized by bureaucracy;

innefficiency and ineffectiveness; lack of incentives, creativity, dynamism and vibrancy; generally

slow in response and corrupt. This is a challenge for this sector to work perfectly with a private sector

whose characteristics are, generally, the opposite of those of the public sector.

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Among the typical examples of areas where there is a challenge for the two sectors to work

together smoothly in a PPP arrangement in Tanzania, is in the slow speed of decision making and

implementation in the public sector. A private sector partner may submitt a proposal for a PPP

arrangement (or respond to a call for one from the public sector), but the receipt of the proposal is not

acknowledged by the public sector and it takes extra long time to reach key decisions on the poposed

PPP arrangement due to the bureaucratic nature of the public sector. It takes extra longer time for

contracts to be signed and payments to be made in the public than in the private sector. This is a dis-

incentive for those in the private sector that would like to enter into a PPP arrangements with the

public sector, hence a challenge.

7.4. Capacity Issues

Another challenge is the capacity of both the private and public sectors to properly operate and

manage a PPP arrangement.

Generally, there is inadequate capacity – especially in the private sector – to properly

participate in a PPP arrangement. Due to the nature of the private sector in Tanzania it is likely that

there will be lack of internal capacities in issues like contract knowledge, contract formation,

negotiation and management in the context of PPPs. Due to the lack of this specific capacity, the

private sector may need to hire legal expertise which adds to its transaction costs in entering into a

PPP arrangement with the public sector.

Another aspect is the general inadequacy of the needed funds, knowledge, experience and

equipment by the private sector to implement a PPP arrangement. The majority in the private sector in

Tanzania are likely to be lacking the above capacities.

As seen in the various cases of application of PPPs in Tanzania above, there are a number of

conditions that the prospective private sector partners are supposed to fullfill before entering into a

36

partnership arrangement. These include possession of appropriate amount of money, knowledge,

equipment and experience. Some private firms may be having these, but due to the huge informality of

the sector, these may be undocumented. Due to the nature of the private sector in Tanzania, it may be

difficulty to prove and/or verify that a certain equipment (say a vehicle, tractor) belongs to a firm as

these are normally registered in individuals’ names but used for business purposes.

These and other similar challenges therefore make it difficulty to properly apply the PPPs

concept in Tanzania. It becomes a challenge forexample, to get quality service providers that can

athere to standards and terms of reference in service provision.

8. WAYS FORWAD IN THE APPLICATION OF PPPS FOR SERVICE DELIVERY

From what has been presented in this paper, it is evident that the PPP concept is being applied

in Tanzania as one of the strategies to deliver public service more effciciently and effectively.

However, there are a number of challenges that parties in a PPP arrangement stand to come across. In

what follows, some ways forward in application of PPPs in Tanzania are given.

8.1. Embrace More PPPs

The use of PPPs arrangement is better than pure public or private sector provision of some

goods and services. Each of the two sectors has its weaknesses. But when they enter into a partnership,

there are great possibilities for advantageous synergies to arise that most likely contribute significantly

into better service delivery as evidence in the case of Morogoro municipal council.

As a way forward therefore, it is recommended that Tanzania and other countries should

embrace more the use of the PPPs concept. The concept should be used appropriately given the

peculiarities and specificities of each country and goods/services to be provided.

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8.2 Capacity Building and Development

The current environment under which the PPPs concept is applied in Tanzania and most likely

in other developing countries needs to be improved. The areas for improvement include understanding,

accepting, supporting, approving and getting exposure to the use of the PPPs concept by both the

private and the public sector. In this regard there is a need for capacity building and development in

various forms including training (formal and/or informal) and study tours to best practices areas within

and outside Tanzania/Africa.

There is also a need to build the private sector capacity in various aspects by way of

empowerment in such areas as contract formation, negotiation and management; and in specific

service delivery by way of provision/upgrading skills and knowledge through training.

The sector needs also capacity building and development by way of empowering it through

provision of equipment to implement PPPs contractss. This could be done by various ways including

giving better environment for the sector to access loans, credits and grants facilities under various

arangements including government guarantee schemes.

9. SUMMARY

The paper has dwelt on the application of the Public-Private Partnershps (PPPs) for in service

delivery. Some pieces of evidence for the application of the concept in various LGAs in Tanzania have

been documented by a survey research design. These have been cemented by a detailed and in-depth

case study of Morogoro municipal council. In the case study, the public services that are delivered by

the private sector have identified; reasons for the municipality to out-source those services and

procedures to do so have also been identified. Furthermore, the case study has identified the

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performance of private sector delivery of various public services; key issues in successfull application

of PPPs and challenges encountered in Morogoro municipal council.

Some general challenges that parties in a PPP arrangement may face in Tanzania and

developing countries in general have also been identified in the paper. These include private and

public sector-related challenges and challenges related to the capacity to implement a PPP

arrangement.

Among the ways forward recommended include more application of the PPPs concept and

capacity building issues, for both the private and public secor.

10. CONCLUSIONS

The author concludes that, it is evident that the PPPs concept is being used in Tanzania’s bid to

improve public service delivery by the private sector. However, a number of potential and actual

challenges are likely to be faced by parties in a PPP arrangement. This is mainly due to the fact that it

is not easy to attain adequate critical mass of the requirements for a smooth operation of the PPPs

concept in developing countries in general and Tanzania in particular. In light of these challenges

therefore, it is further concluded that there is a need for interventions if the PPPs concept is to be

meaningfully used as one of the stragies for better delivery of public services in Tanzania and beyond.

There is, therefore, a need for capacity building initiatives.

11. POLICY IMPLICATIONS

Policy and desicion makers are adviced to support and facilitate more use of the PPPs concept

for better public service delivery. They are also adviced to initiate, develop, support and facilitate

more capacity building iniatives and development in both the private and public sectors for a more

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smooth and successfull application of the PPPs concept for better service delivery at local, national,

sub-regional, regional and global levels.

12. RECOMMENDATIONS FOR FURTHER RESEARCH

There are a number of issues that the author woud have liked to adress in this paper but it has

not been possible due to, mainly, resources constraints. These are areas where a call for further

research in the future is made. The areas include making a similar study in other countries; upscalling

this study in various ways – including covering more LGAs and other public institutions; making more

empirical study, especially on the challenges that parties in various PPP arrangements in various parts

of the world face and their proposed ways forward. Over time, there will be a need to update this

study. The author welcomes collaborative studies on these and other issues that emanate from this

paper.

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