ABSTRACT
Accountability and transparency have long remained an area of concern in public-private partnerships (PPP). In addition, there is a concern in the literature to examine accountability from a developing country’s perspective. This thesis responds to the call by drawing on the Shaoul et al’s (2012) governance-based reporting framework which has received little application in literature to examine the extent to which PPP delivers public accountability in water supply sector. The study focuses on the water supply sector as it remains the only sector that has seen the most successful private sector participation in Sub-Saharan Africa, particularly in Ghana. The main objectives of the study are to examine that extent to which PPP in the water supply sector provide public accountability and possible challenges with associated implications for accountability.
In order to achieve the objectives of the study. The researcher adopts a single case study approach, which is based on the qualitative methodology involving the use of interviews and documentary analysis.
The findings shows that there is a limited disclosure and transparency of information in the water supply sector in Ghana due to “commercial confidentiality”. The lack of information about PPP transaction in the water supply sector reduces the public ability to make an informed decision and pass judgements on PPP transactions. Secondly, findings reveal that there is a lack of public consultation in PPPs in the water supply sector, particularly as citizen and taxpayer do not speak with a unified voice. Thirdly, the finding of the study reveals that PPPs lack the right institutional framework. As a result, unsolicited PPP projects are relatively expensive compared to traditional competitive tendering, creating affordability challenges for the citizens. Fourthly, the finding from the study reveals that key institutions, such as the Audit Service of Ghana, are not involved in the evaluation and monitoring of PPP transactions to ensure value for money. In addition, the external evaluation is undermined by the lack of information in the public domain.
The study provides several opportunities for further studies. In future, other studies can draw on the governance-based reporting framework to examine accountability practice in other important sectors of the economy. In addition, future studies can centre on how the clash of organizational culture between the public and private may complicate accountability within the context of PPP.
CHAPTER ONE
Introduction
The focus of the study was to explore the extent to which on-going PPPs in the water supply sector deliver public accountability. In addition, the study examines the major challenges in PPP and their implications on public accountability. This chapter presents a general overview of the entire study. This study starts by presenting the background to the study and identifying the research problem, the scope of the study, and the objectives of the research. It also presents the research questions, the significance of the study, the scope and finally the chapter outline.
Research Background
The concept of Public Private Partnership (PPP) has become central in the effective delivery of public goods and services, ordinarily provided by the public sector (Hodge & Greve, 2005: Forrer, et al., 2010). PPP opens up the possibility of provision of public services in a form of partnership and/or a joint venture between a private company and the public sector (Broadbent & Laughlin, 2003).
Most countries today consider PPP in addressing vital developmental challenges in their societies (Palmer, 2010). The concept has received several interpretations in literature, whereas some see PPPs as a new governance tool for contracting for public services through competitive tendering (Joshua & Hudon, 2015). Linder (1999) and Schaeffer and Loveridge (2002) argued that PPP is a new expression in the language of public management, which describes an already existing procedure of involvement of private organizations in the delivery of public services.
Over the last three decades, there has been a progressive partnership between private companies and the public sector both globally and locally. The collaboration between the parties is expected
to promote efficiency, unleash market forces and competition which is inherently absent in the public service (Andrisani et al., 2002). This is part of a new wave of liberal policy, which promotes private sector efficiency and market mechanisms (Miraftab, 2004; Steger & Roy, 2010).
The neo-liberal policies concentrate on promoting privatization of public services delivery, public sector reforms and the introduction of private sector models of governance and accountability into the public sector (Broadbent & Laughlin, 2005; Steger & Roy, 2010; George, 2004). In a broader context of neoliberalism, the government as an enabler or purchaser of public service contracts private providers to make public service more efficient and to achieve the better social outcome (Glynn & Murphy, 1996). In this regard, PPP uses resources from the previously separate purchaser and provider. The split between purchaser and provider of public services transfers public expenditure outside direct state control (Shaoul et al., 2012). This raises questions as to how governance and reporting mechanisms in PPP can provide accountability for state resources and services in the context of PPP where, private sector legislation and accounting standards allow confidentiality of information in the pursuit of competitive advantage (Watson, 2003; Depoers, 2000; Shaoul et al., 2012).
Developing countries have also started to adopt this neo-liberal policy and the free market economic system in different shades (Brenner & Theodore, 2002). Ghana’s PPP policy, introduced in June 2011, was among the few governmental policies aimed at opening up public services to the private investor (Ministry of Finance and Economic Planning (MOFEP), 2011). The policy reflects the desire of the government to bridge the infrastructure gap and to provide better services through private capital and managerial expertise (MOFEP, 2011). The government published twenty-two (22) new pipeline projects undertaken via the PPP model. This sparked interest in private investors, leading communities and the international agencies.
The promulgation of Ghana’s National PPP Policy is a recent phenomenon. However, there has been a progressive involvement of the private sector in the water supply sector. Additionally, the PPP program came at a time when the public is demanding greater accountability and transparency in government’s process due to immense increase in private participation in the provision of public goods and services (Rahaman, 2009: Ameyaw & Chan, 2013) particularly as such partnership arrangement is less accepted in the Ghanaian context as noted by CEPA (2015).
In Ghana, studies have focused primarily on the rationale for the implementation of PPPs and factors, which have a positive impact on the successful implementation of PPPs in the water supply sector. As emphasized by Shaoul et al (2012), accountability and accounting has been an area of concern in PPPs. The thesis aims to examine how accountability is practiced in PPP by focusing on specific information disclosure and governance mechanisms.
Statement of the Problem
Governments around the world turned to the private sector in the form of PPPs to address service delivery gaps, operational failures, infrastructural backlogs, and funding gaps in the provision of public services, since the early 1990s (UNECE, 2008; Shendy, Kaplan, & Mousley, 2011). These partnerships compensate the gap in knowledge, capacity and form new lines of accountability between the two parties (Walker & Johannes, 2003, Trafford & Proctor, 2006). Thus, various partners are supposed to draw on their respective strengths to provide better services to the citizens. Although governments continue to employ the use of PPPs, these partnership arrangements are not without their own set of problems (Miraftab, 2004). These technical and structural problems and complexities in the creation of PPP have led to the concept receiving substantial research attention (Forrer et al., 2010). A review of extant literature identifies significant differences between this study and other studies.
Fundamentally, previous research has focused on the rationale for the implementation of PPP and important characteristics, which influences the successful implementation of PPPs (Ismail & Haris, 2014; Amanyo, 2013). Thus, authors investigate the factors that lead to the implementation of PPPs both at the central or local level. In addition, other researchers explore the differences in perceptions of the actors of a PPP arrangement in relation to the rationales for implementing PPP. For example in Ghana, the rationale for the adoption of PPP is to enhance the country’s development, encourage private sector participation in economic development and reduce the Government’s role in providing public services delivery (Amanyo, 2013: Ameyaw & Chan, 2013)
Secondly, studies on PPP echo substantial success and failure factor that needs to be addressed. In the United Kingdom, for instance, a descriptive model, with five key characteristics, including good communication, openness, effective planning, ethos and direction, was developed. The model was identified to go hand-in-hand with the success of PPP (Trafford & Proctor, 2006). A similar study conducted in the UK a year later came out with inconsistent results. The study identified the need to emphasize strategies for the value for money (VfM), risk transfer and expertise for PPP project to be successful during completion (Nisar, 2007). Also in Ghana, a developing country, Ameyaw & Chan (2016) identified commitment of partners, strength of consortium, asset quality and social support, political environment, and National PPP unit as factors underpinning the success of PPP in Ghana. They noted that these factors model a “very high” positive effect on a successful implementation of PPPs in Ghana’s water supply sector (Ameyaw & Chan, 2016).
Although these studies have addressed some of the problem which exists in PPP, there still exists the problem of accountability in practice as a product of the transfer of private sector corporate governance and accountability regime to the public sector (Andrisani et al., 2002: Shaoul et al.,
2012). The involvement of private companies in the provision of public services changes the nature of public sector accountability and governance mechanisms (Shaoul et al., 2012: Skelcher, 2010). The expansion of PPP in the public service transfers the public expenditure and revenue outside state control, creating accountability dilemma as to how reporting and governance mechanism in PPP provide public accountability (Watson, 2003).
This problem of accountability in PPP is consistent with global trends. However, studies on accountability in PPP in literature has focused mostly on developed countries. Therefore, the call to provide contextual clarity on accounting and accountability as practiced in PPP has not been entirely comprehensive (Fombad, 2013b; Zaato & Hudon, 2015). One appropriate theoretical lens that can be used to respond to the call from developing countries’ perspective is the governance- based reporting framework (GBRF). The GBRF examines how governance and reporting mechanisms work below the central government to deliver accountability (Shaoul et al., 2015). There have been calls to use this theoretical lens to examine accountability in different contexts (Shaoul et al., 2012). The Shaoul et al. (2012) theoretical framework has not been widely used yet. Hence, it is both a concern and inspiration as it leaves a further gap in the literature.
In summary, the motivation for the study is in two strands. Firstly, the study focuses on the water supply sector of Ghana where prior research has focused on the rationale and the operations of PPP water supply projects in terms of risk, critical success factors and their performance without any attention on whether the operation of PPPs delivers public accountability. Secondly, the study employs the use of the Shaoul et al’s GBRF which has received little application in literature to examine the extent to which PPP delivers public accountability. Furthermore, there is a concern in the literature to examine accountability, particularly from a developing country’s perspective.
