Governments are key actors in the financing and delivery of human development services, but the private sector (for-profit and non-profit) is playing an increasingly significant role in health and education. More than half the service use for many MDG-related needs is with private providers, while the majority of health spending in many developing countries comes from private sources.
The scale of the MDG challenge, enlarged by the impacts of the global financial crisis, calls for mobilizing participation from all sources. There is a lot of scope for greater private sector contributions in terms of both services and funding but also of the potential for innovation, flexibility, and quality improvements. New vehicles are emerging to enhance these roles.
To work effectively with the private sector, and minimize the risks that could accompany a lack of direct government control, governments should choose partnerships that suit local needs and conditions, focus on outcomes, and gain more expertise in contracting, monitoring and evaluation, and regulation.
Private providers also play a large role in treatment of communicable diseases. In 22 high-TB-burden countries, authorities reported that private providers participated in TB-related activities at about the same rate as public providers. [Figure 3.4]
Demographic and Health Survey (DHS) data reflect a shift from traditionally-attended delivery of babies at home to the use of government facilities. This is the only area in which the private share has clearly reduced over time.
DHS surveys show no indication that the use of private sector use health services is more prevalent among those who are better-off. However, private services used by poor people tend to be by the informal sector.
There are very few systematic and representative studies of quality of care in poor countries, and even fewer comparing public and private providers. The limited evidence suggests that governments and donors should be much more concerned about health care quality.
Innovative examples of leveraging the private sector’s role in health
Through the Chiranjeevi Scheme in India’s Gujarat state, the state government has developed an innovative contracting mechanism to pay private obstetricians to provide institutional deliveries to poor women. Based on its initial success in raising the share of institutionally-delivered babies from 38 to 59 percent, the scheme was expanded to cover the entire state.
The Child and Family Welfare (CFW) network in Kenya is a purely private initiative that illustrates the strategy of “social franchising” to engage private providers in offering quality-assured, standardized, and branded services under agreed price and service conditions. CFW outlets are located in market centers in agricultural areas of approximately 5,000 people. The network now has 17 drug outlets and 48 basic medical clinics in operation.
In countries where data is available, such as Jamaica, Peru, and Zambia, the private sector contributes more than 40 percent of total expenditures in education. In others, such as Chile, Haiti, Kenya, and Paraguay, the share ranges between 30 and 40 percent. In South Asia, about 30 percent of primary and secondary enrollment is in privately owned institutions.
private enrollment shares at the primary school level increased significantly in countries in most regions, particularly Sub-Saharan Africa, the Middle East, and Southeast Asia. However, private enrollment shares remain typically higher at the secondary level than at the primary.
A larger share of education is provided privately in poor countries than in rich ones.
Innovative examples of leveraging the private sector’s role in education
Universal voucher systems continue to be rare. In Chile, such a system allows students to select their own school, public or private, tying per-student public funding to school enrollment. These programs are difficult to evaluate.
A contracting program in Cote d’Ivoire addresses the lack of public school capacity in a pragmatic way. The government remains responsible for ensuring basic education but uses the private sector to make up for short-term gaps.
Bangladesh’s stipend program has resulted in greatly increasing female school enrollment but has been less successful in terms of improving quality.
Pakistan’s Punjab Education Foundation takes advantage of the existing private sector to increase enrollment in underserved segments of the population.
The IFC-supported Kenya Private Schools Financing and Technical Assistance Program provides local currency financing and technical assistance to private primary and secondary schools, with a 50-percent risk-sharing arrangement in place between the IFC and the K-Rep Bank.
New vehicles to support private contributions to health and education
Besides increased funding from traditional donors, major new international philanthropies have emerged as a significant source of funds. For example, the Gates Foundation committed over $11.6 billion since 1994 for global health programs such as the Global Alliance for Vaccines and Immunization (GAVI).
An emerging vehicle for private financing is community financing and micro-insurance, typically small-scale schemes initiated by NGOs.
Corporate finance is being leveraged for disease control. One example is Debswana, a 50/50 partnership between De Beers Group and the Botswana government to combat the HIV-AIDS epidemic.
Non-profit service providers are playing a more prominent role in many low-income countries. This includes both international and national non-profits. The Bangladesh Rural Advancement Committee (BRAC) runs large-cale programs both in its home country and in other low-income countries.