Hello and welcome to this module on private sector involvement in municipal waste services. This can be a quite political sensitive topic, given the relevance of solid waste management as a public good. But let's be clear from the start. In this module, we are not talking about transferring responsibility of solid waste management. Responsibility, independent of who operates the service, always remains with local government. Regarding private sector involvement: in literature, you will often come across the two terms PSP or PPP, Private Sector Participation or Public-Private Partnerships. This can include a lot of things in terms of scale of enterprise, starting from the very small and informal, to the large national or even international enterprises. There are also different levels of privatisation being joint-venture of an enterprise with the public sector, or even the involvement of community groups or non-governmental organizations. This is also the object of another module. In this module, I shall focus on the formal private sector involvement, as seen from a municipal viewpoint, but also cover the opportunities of small and medium enterprises in waste management. My main message, in this module, is not to advocate blindly for the private sector, but rather show what conditions should be considered so to allow the private sector participation that it has a good chance to improve the situation. Why would a municipality consider engaging with the private sector? From a municipal viewpoint, a frequent reason for engaging with the private sector is increasing efficiency and lowering cost. However, efficiency is driven by competition. The private sector, usually, also has more flexible procedures and procurement rules, less bureaucraty. Increasing efficiency, may also allow to expand coverage to areas not yet serviced. Experience from Latin America, Malaysia, for example, has shown a decrease in cost, by 20 % to 50 %. One other aspect may be the easier access to the private sector to capital as compared to a public utility; also, the flexibility in deploying human resources, for instance in hiring the necessary expertise, if needed, or laying off personnel which is not performing. Finally, another reason may be to free solid waste from political interference. One key precondition for successful private sector participation is a balanced partnership with the municipal authority. If the private sector is very dominant, then, there are risks for disaster. The same if the municipal authorities are very dominant and can decide in contractual terms over the private sector. Besides balanced partnership, another precondition for successful private sector participation is competition, competition by different private sector enterprises. This keeps prices low. If there is a monopoly by one enterprise, that might even increase the price of service. Further preconditions are clear objectives and precise contracts. What that means is a very careful preparation of the tender documents by the municipal services. What it also needs is adequate monitoring and enforcement by the client, the municipal, authorities, and to ensure regular payment to the private sector for the services rendered. Finally, the last precondition I want to mention here is public involvement. The residents, the public are actually the beneficiaries of the service. Involving the beneficiaries, especially in monitoring, and giving feedback on service quality is essential, but also in preparation of private sector enterprise involvement in solid waste management services. This table shows different options of collaboration with the private sector by the municipality. Contracting, where a fixed term contract is awarded, based on competitive procurement, and the service is paid by government. Similarly, franchising, where, however, the revenue sources come through direct charges to the beneficiaries. And finally, to highlight maybe the open competition, where the government grants a license, and allows the private sector to compete for service provision. Private enterprises billed the service directly to the customers. One special case is the involvement of small and medium enterprises. One advantage is that small medium enterprises are close to home. That means they're quite closely connected to the beneficiaries. Often, they are people from the same neighborhood, working in the neighborhood. They can also adapt their services to the individual needs of the beneficiaries, of the people in the neighborhood. However, usually their services are limited to neighborhood service. That means primary collection and recycling in the neighborhood. And because they're limited to the neighborhood service, they have to coordinate with the next step in the waste management chain which is typically the municipality. For the municipality, engaging with many small enterprises is quite difficult to manage. One solution forward is to build larger groups, cooperatives, or consortiums. Let me highlight one case study from Douala and Yaoundé in Cameroon. Here, the municipality gave contracts to the private sector. Exact targets and even the schedule frequency were defined in the contracts. The tonnage of waste collected was monitored daily for neighborhoods which were difficult to access by large trucks. The enterprise entered into agreements with community-based organizations, for primary collection. Since private sector involvement, the collection coverage has now increased up to 80 % to 90 %. The private enterprise was given a five years contract, so they were also able to recover their investment costs. The company now has contracted with fourteen towns and cities throughout the country, and it has won the Africités prize for Waste Management in 2009. Another example is the municipality of Maputo in Mozambique. The city of Maputo is divided in two different administrative districts. The municipality provides waste collection services across the city. Inner city waste collection and secondary collection in the suburban areas are covered by a private large scale operators, with public containers and compactor trucks. The city councils own operation covers the residential areas in the inner city with door to door collection. Based on various experiences with NGOs, the city council implemented primary collection system for the suburban neighborhoods. Primary collection in these areas is provided by micro enterprises, with manual door to door collection and hand carts. The city's ambition was to extend primary collection to areas that would be difficult to reach with modern collection equipment. Monthly waste fees are attached to the electricity bill. This model is particularly interesting, because fees increase according to the social economic level of the users. Currently, thirty five micro enterprises or associations are contracted by the Maputo city council and are servicing over 900 000 people living in the suburban areas. This model has become a great success for the government. And here is one example of micro enterprise involvement in Managua, Nicaragua. Collection services are provided by the municipality, but only on the main roads. However, collection by motorized tricycle is provided to the households through these small enterprises. Revenues are from user fees and mainly from recyclables. What is important, however, is that the municipality ensures that there are transfer stations available for these micro enterprises, which are operated by the municipality. This even includes sorting and storage sheds for the recyclables. Let me summarize what we talked about in this module. We looked at private sector involvement as opportunity for increasing efficiency and lowering cost. We also saw that it needs a lot of capacity at local government level to prepare the tender documents, but also to monitor and supervise the service. Competition helps a lot to keep prices low, and it's important to include the public in the whole procedure. Finally, we ended with showing a few case studies. If you're interested in reading more about private sector involvement in solid waste management, I can recommend these three books. They are available on our website for free download.
