The Senegalese Press Agency tells us in an article published on September 1, 2020 and entitled “The FONSIS-IFC partnership extended to the health sector” that the Sovereign Fund for Strategic Investments (FONSIS) and the International Finance Corporation (IFC, World Bank Group) have agreed, under a memorandum of understanding, to extend their cooperation in the health field, in order to implement priority projects and public-private partnerships (PPP). As a reminder, FONSIS is a public limited company that is 100% owned by the State of Senegal and the International Finance Corporation (IFC) is the private sector investment arm of the World Bank. FONSIS and IFC therefore have the ambition to co-invest with private companies in private clinic or hospital projects aimed at consolidating Senegal’s positioning as a hub for medical services in the West African region.
Without a doubt, the privatization of health care in Africa and more particularly in Senegal, must be regulated for several reasons that will be covered in this analytical note.
In a context marked by the Covid-19 pandemic, the urgency is to endow sufficient resources to public health establishments to enable them to cope with the high number of cases and ensure the continuity of services for other diseases but not to invest in private infrastructure whose geographic and financial accessibility is not guaranteed for the majority of the Senegalese population—who are composed of some of the most vulnerable segments.
As a reminder, IFC’s PPP (Public Private Partnerships) contracts are contested by civil society organizations CSOs (partners from both North and South) because there is a fundamental lack of balance between private and public interests. These PPPs are also accused of failing to understand certain essential provisions, such as force majeure, termination indemnities and dispute settlement. CSOs also highlight the observed imbalance on contracting authorities’ intervention rights, termination events and handing over of assets at the end of the contract, which are drafted in an impartial manner.
CSOs demand more coherent and balanced contracts, which clearly define the sustainable development objectives of the recipient country with a fair and equitable distribution of risks and benefits, as well as rights and responsibilities between the parties to the contract.
It is also important to note that PPP contracts also involve budgetary risks. The IMF already pointed out in 2004 that PPPs are sometimes used to circumvent expenditure control by shifting public investment out of the budget, while it is the government that bears most of the risks incurred by the PPP and has to face potentially significant additional budgetary costs. In 2018, the IMF published a note on controlling the budgetary costs of PPPs. The note raised concerns about the costs, risks and lack of proven efficiencies of PPPs. It notes that “while in the short term, PPPs may seem cheaper than traditional public investments, however, overtime, they can turn out to be more expensive and undermine fiscal sustainability.” The same note indicates that “the budgetary risks of PPPs are significant” because the average budgetary cost of contingent liabilities linked to PPPs which materialized between 1990 and 2014 represented around 1.2% of the national GDP of the countries where PPPs had been contracted, and according to the authors, “with the increasing use of PPPs by countries, the size of the associated risks is likely to increase as well. “
Aside from these disadvantages, two clear examples of PPP in the health sector should prompt Senegalese decision-makers to think more before embarking on this process. Two hospitals have recently been built in Africa by private companies at a cost far greater than that of a public hospital. In the Democratic Republic of Congo, the Cinquantenaire Hospital cost $ 100 million (US) and has 500 beds and state-of-the-art equipment. However, the consultation costs are between $ 20 and $ 25 (US), while the majority of the population lives on less than $ 1.25 (US) per day. In Lesotho, a new hospital cost the government $ 67 million (US) per year. While the IFC had predicted that the new hospital would cost the same as the public hospital it was replacing. But in reality, it cost the government 51% of the total health budget. This means for this country, less resources available to manage health problems especially in rural areas where three quarters of the population live.
A recent IFC report says more than half of health care in Africa is provided by the private sector. In fact, Oxfam’s analysis of data used by IFC found that nearly 40% of the “private supply” identified by IFC comes from small stores that sell drugs of unknown quality.
Hence, the urgency of regulating health care financing in poor countries like Senegal.
Lebanon has one of the most privatized health systems among developing countries. It spends more than twice of what Sri Lanka spends on health care and yet infant and maternal mortality rates are three times higher than in Sri Lanka. The private sector is heavily involved in Chile’s health system; this country has one of the highest rates of caesarean births in the world, yet more expensive and not always necessary. In Lesotho, research found that only 37% of sexually transmitted diseases were treated correctly by private contract providers, compared to the 57 and 96% of cases treated correctly at public health centers.
Public health structures have sufficiently shown that they can play a leading role in achieving UHC by ensuring the geographic accessibility, availability, affordability and acceptability of health care.
The head of state has planned a budget of 500 billion over the period (2020-2024) to invest in the sector. If spent wisely, this investment can be a breath of fresh air for the system. In addition to the 4 new modern hospitals in Kaffrine, Kédougou, Sédhiou and Touba, all of these investments should help make our health care system more resilient and stronger.
If there is one lever on which we must insist for a sustainable management of public goods and services, it is to establish efficiency in public expenditure, the optimal use of public resources as a cardinal criterion in the execution of our public policies.
If the relevance of the health infrastructure privatization process was proven and socially acceptable to the government, then CICODEV urges it to set up an independent and inclusive regulatory body (involving civil society) from the start of the process. The goal is to have a strong and sustainable health system, adequately resourced and meeting the expectations of the most vulnerable.
By CICODEV Africa