Government Should Quit Business

Published on 30th May 2006

A few weeks ago, a young boy was knocked dead by a speeding vehicle as he crossed the Kampala- Masaka road in search of water, near Kyengera town. The commodity had become extremely scarce in most parts of the city. Shortly after, residents of the area gathered around the victim passionately voicing outrage and threatening to demonstrate violently if the government did unplug the cotton in its ears and construct humps on this spot that has claimed many a life, to tame motorists’ speed.


The blatant truth from this unfortunate incident is that this boy lost his life partly due to inefficiencies that come along with government controls on water and road networks. In Uganda, water is controlled by the National Water and Sewerage Corporation (NWSC) and the Directorate of Water Development (DWD), all public enterprises under the government. NWSC is a parastatal utility entirely owned by the Ugandan Government and established with a mandate to "operate and provide water and sewerage services in areas entrusted to it, on a sound, commercial and viable basis". DWD on the other hand is under the Ministry of Water, Lands and Environment, formed after a government restructuring process. It is the lead agency for water and sanitation mandated to manage and develop water resources.


All these public enterprises are clustered in the urban areas only and are not efficient. Out of a total of 150 urban centers, 15 towns are under the jurisdiction of NWSC while 141 small towns and local governments are under DWD. The urban population is only 15% of the entire country's population while the larger 85% are languishing in villages with acute shortage of water. Besides, the requirements for one to access this water are too many for the common citizen in the outskirts and slums of Kampala.


The poor roads speak for themselves. Contracts are awarded to briefcase construction companies on the "I know you" basis. The end result is shoddy work and roads that last a few months and crumble under the weight of vehicles.


Douglas Shaw in his classic blueprint for change Privatization for Prosperity clearly says what Africa needs is “a new generation of heroic leaders who will refuse to be satisfied with the hopeless task of making the government a better manager, but instead initiate the process of returning each government department to its rightful place in the private sector-to the benefit of every citizen”.


Radical as Shaw’s statement may sound; it holds a lot of water. Most people believe that certain entities in the public sector cannot survive in private hands; it seems unthinkable to privatize services that have previously been run as public entities. Privatization is the optimum way to run an economy because it produces growth that improves the incomes of the poor. No government can better the lives of a section of people without worsening the conditions of others elsewhere. As Lawrence Reed in Seven Principles of a Sound Public Policy puts it, the government has nothing to give anybody except what it first takes from somebody, and a government that is big enough to give you everything you want is big enough to take away everything you’ve got.


It brings back memories of a time when the Ugandan Government introduced entandikwa, a credit scheme which was supposed to uplift the standards of the rural poor in the country. Government representatives were directly responsible for the distribution of the loans to the locals. As time went by, the method and time frame they used to disburse the credit left a lot to be desired. Complaints accrued because many residents found their application documents being used as toilet paper yet whenever they would follow up, they were asked to wait. The recovery of the loans itself was “rib cracking.” Men and women climbed trees and ran into plantations on sighting government representatives. Imagine if it was a private individual running the show! Being profit motivated and interested in keeping clients, the scenario would have been different. The government has no motivation for profit. It is a bad “businessman.”


Recently, Residents of Nabunyere Village, Kadama Sub-county, Palisa district in the eastern region of Uganda collected UgShs 180,000 and had a borehole drilled in their locality. Each of the 600 beneficiary households of the borehole contribute 1000 UgShs shillings a month and have elected a water users committee to maintain  the water source. The villagers have also appointed a caretaker, whose responsibility is to ensure that the sanitation around the borehole is maintained. Every new member pays a fee before fetching water from the borehole. This private venture has saved villagers from the agony of trekking 4 miles to the nearest water source and carrying water on their heads.


If the government surrendered some of its services to private entrepreneurs, competition for service delivery would increase consequently spurring efficient service delivery at affordable rates. This would render void the collection of taxes for services not being rendered hence allowing citizens to keep more of what they earn, bridging the rich-poor gap.


Privatised roads are a success in Bangladesh (formerly Dhaka).A private bus company constructed its own roads and buses and was able to get returns on its investments as other transport companies began using the well maintained roads at a fee. Leaving roads under government control results into poor roads since the money that is meant for maintaining such roads ends up in personal bank accounts.


When an entity in the public sector is privatised, citizens are able to receive the previously taxed income and pay a smaller fee to access the same service. The biggest advantage is that companies in the private sector work hard to constantly improve their services so as to retain customers. For the government, it is business as usual; it does not gain much by appeasing the tax payers. When privatization occurs, we can gain much from the lower prices, higher and increased variety. As customers, we will choose what is more important to us unlike in government service delivery where variables are simply imposed on the general population without room for suggestions or change.

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