Sunday, February 21, 2010


Public Private Partnerships abound.

In Egypt perhaps once a week or twice or more there are public announcements of private contracting bids for new public private partnerships. The announcements come from the Ministry of Health, the Ministry of Housing, the Ministry of Aviation, and so on – and in partnership with this or that foreign agency (say, a Swiss Development Fund or a Kuwaiti bank) – they seek international contractors to construct a wastewater facility or design the new Medical City or build a new runway for Hurghada international airport.

It seems nearly any public function is placed on an international bid, and it is the ‘big guys’ who get to compete. Not the local construction companies nor even the regional consulting firms. No, they don’t have a shot standing alone. So the local or regional company joins in a ‘consortium’ with a multinational contractor like Halliburton or a Big 5 auditing firm like KPMG.

Why all this?

In short, development agencies offer the reserve-poor, indebted government a loan to contract part or most of the development project to a private company or consortium.

The justifications are many: Egyptians don’t have the proper technical expertise; Egyptians don’t produce internally the proper tools, parts, materials; private international investment will attract more investment, which will generate growth; and so on.

Well, it is not just reserve-poor, indebted governments like the Egyptian one that contract out their development role. In fact, most countries outside of the Global North, even the superbly wealthy ones of the Gulf region, contract part or most of their new development projects to Northern companies.

Who else to do development then those who are developed?!

But wait, are multinational corporations experts at development? These corporations or company consortiums are offered fantastic deals. In fact, that is the whole point of attracting foreign investment: underpricing energy resources and setting up ‘economic zones’ with tax holidays and lax labor and environmental regulations. Why else would a foreign 'investor' come to Egypt, when it may get a better deal in Vietnam or India?

In the end the job may or may not be done properly; nonetheless, huge profits are reaped by a few. There has been no or little realization of internal capacities to get the next job done.

And Egypt has more debt. It borrowed money for this PPP and will borrow money for the next.

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