As a result, we are seeing a growing number of governments and donors supporting them. But the prevalence of PPPs in education still pales in comparison to that of health and other sectors. So what are the lessons the education sector can learn from the health sector about PPPs?
- Policies and regulations within the sector matter, but countries must look across sectors to identify and remove constraints
- Transaction support and capacity building ensures governments can achieve their goals
- Investment in the private sector is critical for scalability
Ensuring the regulatory environment encourages entry by private providers, while simultaneously ensuring that high-quality goods and services are provided, is key. But the best intentions can be undermined if national legislation and regulations are not coordinated properly. In the early 1990s, the government of Colombia wanted to introduce generic drugs to increase access to low-cost medicines for its citizens. But high tariffs on the active ingredients needed for the generics, and the cost of registering any new product, stifled their efforts. The government responded with a phased-in regulatory approach and coordination across departments resulted in reduced tariffs. The percentage of generics purchased in the local market increased significantly from less than 5 percent in 1992 to more than 66 percent by 2009 and 90 percent by 2011. Similarly, in education, school registration guidelines are often cumbersome and tariffs increase the cost of inputs. To help governments meet their national education goals, the World Bank Group is using both its PPP expertise and its vast policy experience to help them assess their regulatory environment more broadly to get the most out of PPPs.
Transaction support and capacity-building are also critical to establishing a successful PPP. Governments entering into PPPs for the first time, or those embarking on innovative models, often require additional outside support. For example, the government of Andhra Pradesh wanted to improve access to diagnostic services for its poorest citizens. This was a new approach for the government and they invited the International Finance Corporation to provide transaction advice. The project led to the successful provision of services to the poor at about half the cost of the original market rate, and it allowed the government to provide services to a larger number of under-served patients within their allocated budget. Transaction support and capacity-building is more common in the health sector, but similar principles around assessing PPP options (contracted education institutions, charters or voucher programs) would also apply in education. The IFC has recently started to provide this support in the education sector, one innovative example is the schools in Belo Horizonte in Brazil.
PPPs are only able to work if there is already sufficient capacity in the private sector or the means to build capacity in a sustained fashion through additional investment. Private-sector investment is important to ensure there is a sufficient number of high-quality private providers to bring a PPP to scale. For example, the government of Tanzania wanted to reduce the prevalence of malaria by increasing the use of insecticide-treated bed nets. A private-sector innovation by a Japanese manufacturer led to the production of insecticide-treated nets that last much longer than traditional nets. Support from outside investment led to technology transfer (royalty-free) to four local manufacturers and support to buy the necessary machinery and to obtain the quality-assurance certification. By 2008, the four firms employed 3,000 workers and were producing more than 10 million nets a year, sold by a network of 200 wholesalers and 6,400 retailers. The IFC, through its education investments, is also helping bring education innovation to scale through Bridge Academies in Kenya and Laureate International, which is one of the very few education providers that are managing some of the Colleges of Excellence in Saudi Arabia under a PPP program.
PPPs in the health sector provide examples, both positive and negative, that the education sector can learn from, adapt and build upon. So what would it take for PPPs in education to make a bigger impact in the coming years? From our perspective, it would take coordination across policy, solutions and finance – so, across the World Bank Group, that would mean bringing the Education Global Practice, the PPP Cross-Cutting Solutions Area, IFC Advisory Services and IFC Investment together, with public and private partners. What would it take from your perspective?