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In South Africa, Broomberg and Mills found that the costs of contracting-out provision of district hospital services were higher than direct provision by the public sector. Beall (see backfold) draws attention to instances of private operators working under contract to municipal authorities in India and Pakistan who have undermined successful community-based waste management initiatives. There are also question-marks over NGO and church provision, which are not always cheaper or of higher quality than publicly funded services.

As Ugaz and colleagues have argued (see following piece), these questions point the way forward to a new welfare pluralism which can avoid the inefficiencies and limitations of state provision, and problems of exclusion and fragmentation associated with the private sector. In this model the state, private providers and NGOs take on complementary roles and responsibilities.

Problems of high costs, poor quality and uneven coverage mean that the state cannot assume a dominant role in social service provision in most developing countries. For some types of services the state will continue to remain the key provider, where the private sector in neither willing or capable of intervening, for example in municipal waste disposal, preventive healthcare and urban drinking water supply, to ensure equitable access and achieve sustained improvements in social indicators. The experience of middle-income developing countries suggests that:

  • A basic healthcare package that is equitable and of an acceptable quality is best provided by a conventional national healthcare system.
  • The state still has a key role in planning and integrating health and education services.
  • Where private sector provision of quality services is already well established, the state’s role will largely be to regulate provision and enforce minimum standards.
  • In situations where private providers secure contracts from the state, there is a need to enhance state capacity to negotiate, implement and monitor contracts.

The growing prominence of the non-profit sector in the financing and provision of social services pose some of the greatest challenges to the state’s conventional role. As Robinson and White have found (see: States with citizens? Civic organisations and social service provision) there are growing numbers of examples of complementarity between the state and non-state sectors. State agencies can retain responsibility for planning health provision but implementation can be contracted-out to the commercial sector and NGOs. The state can directly subsidise private provision through education vouchers or tax exemptions on medical supplies. Financing for specific kinds of services can come from state and private sources, as Beall’s examples of community-based schemes for solid waste management in India and Pakistan illustrate.

But the non-profit sector’s role is not restricted to direct service provision and creating social safety nets for the poor. Perhaps its greatest potential lies in widening opportunities for citizens to participate in decision-making and in enforcing accountability from state and commercial providers. Both public and private providers have proved notoriously impervious to citizen oversight and feedback. Increased participation by individuals and communities as stakeholders can improve standards and increase accountability. It may not be a panacea for problems of social service provision, but citizen participation constitutes an integral element of the new welfare pluralism, in which greater diversity of financing and provision are balanced by increased involvement on the part of consumers in shaping policy and exercising choice.

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