The 6th Annual International Conference on Public Administration and Development Alternatives 06 - 08 October 2021,

Virtual Conference

Local Government: Practices and Lessons for Delivering

Services Through Public Private Partnerships
A Nduhura, JP Settumba and I Nuwagaba
Uganda Management Institute, Uganda
T Molokwane
University of Botswana, Botswana
MT Lukamba
North-West University, South Africa

Abstract: Governments across the world have given local authorities more freedom and power to meet the needs
of their citizens and communities. Establishing local authorities has been in line with the quest for self-governance
in matters that affect their local aspirations. Existing studies acknowledged that while decen-tralisation has
increased urbanization and a sense of fulfilment of local community aspirations, it has plunged local administrations
in a state of administrative grief caused by resource constraints to meet needs of the rising populations and local
communities. To salvage constraints, public private partnerships (PPPs) have been adopted as a rescue option.
Little is known on the applicability of PPPs in local governments in developing economies. The aim of the study was
to explore practices associated with PPP application in local government setup. Based on an exploratory review of
literature, the study provides guidance on the use and context of the application of PPPs in local government. The
outcome of the study is important since the administrative grief is enlarging due to COVID-19 effects, yet the bulk
of citizens continue to put pressure on local authorities to deliver service amidst financial constraints.

Keywords: COVID-19, Local government, Public private partnerships, Sub-saharan Africa

1. Introduction journey and benefit from their local economy. A range

of factors have motivated local govern-ments to
Public administration has manifested several reforms engage in local economic development. According to
over the last decades. In local government, Peterson (1981), the motivation has largely been
decentralisation has been the most popular reform fiscal and economic problems that arise due to
(Marshall, 2008; Wollmann, 2016). The reform ush- mobility of capital across boundaries of local
ered in multi layers of government in developed and government from local government to cities or across
developing countries. The devolution of such a nature geographies other than investment of wealth where it
of governance has been escalated by the increasing was made to benefit the local community (Peterson,
interest to implement local economic development 1981).
(LED), and decentralisation policies which have been
quite popular in Sub Saharan Africa (Tobi & Oikhala, By implication, it is revealed that the tax benefit that is
2021; Resnick, 2021b). derived from a prosperous local economy is a pri-mary
motivator of the move by local governments to promote
A large body of literature suggests that LED and LED policies and strategies. In other studies, Blair,
Decentralisation concepts have become popular in Fitchenbaum and Swaney (1984), posit that locally
the last 50 years. The concept of local economic developed places provide current and future jobs for
development (LED) refers to improvement of the their residents. Another policy has been
material well-being of persons, the distribution of decentralisation. According to Smoke (1987),
wealth and participation of citizens in their imme-diate decentralisation like privatization has been adopted in
local economy. According to Kindleberger and Africa due to pressure from the international
Herrick (1977), the aim of LED is to enable citizens to development community. As a policy, decentrali-sation
make decisions that define their development seeks to limit the role of central government

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in the affairs of devolved administrative units. In Notwithstanding in some countries like Uganda, the
essence, decentralisation seeks to assign powers and reduction of central transfers and bans on collec-tion
resources to autonomous local governments and of local revenue has caused enormous stress on
enable responsive governance through elected councils service delivery. While other LGs are affected,
and other accountability mechanisms, and adequate municipalities and cities are hit hard as their pop-
capacity of local governments to meet their ulation densities and demands for service delivery
responsibilities (Smoke,1987:9). To deliver decen- tend to be higher than in other LGs' contexts (World
tralisation, three forms have remained popular: Bank, 2018). According to Yang & Liu (2020:17), the
financial, institutional and political decentralisation. COVID-19 pandemic is likely to increase the gap
between "the real expenditure and demand of local
2. Literature Review governments, and the relatively limited financing
channels will continue to exist and may expand".
2.1 Financial Decentralisation Relates with Accordingly, this is likely to escalate the adoption of
the Ability to Collect, Use, Manage and hybrid financing mechanisms such PPPs by gov-
Account for Local Revenues ernments in service delivery. While Public Private
Partnerships (PPPs) have been adopted in some
Political decentralisation is credited for having been countries, PPPs are considered to be a new norm
one of the key notable reforms. With this form of that is attracting iconic status in service delivery
decentralisation, political processes are organized to (OECD, 2014:18-19). Over the years, governments
enable the selection of local leaders at subna-tional have set out to improve public service efficiency and
governments that approve and oversee plans that effectiveness through use of PPPs (Hood &
technocrat execute in delivering services to the local McGarvey, 2002). Public Private Partnerships
people in the administrative units. Institutional (PPPs) in local government are long -term
decentralisation refers "to the administrative bodies, agreements between a local authority and a private
systems and mechanisms, both local and inter- partner that are entered into, with the objective of
governmental, which help to manage and support assuring the financing, construction, renovation and
decentralisation. It also includes mechanisms that operation of a local public infrastructure or service.
link formal government bodies to other key local
actors - traditional local authorities, non-govern- PPPs connect the public and private sectors. While
mental organisations and private sector partners…" Fitzgerald (2004a, 2007b) argues that a balanced dis-
(Smoke, 1987:10). The objective of decentralisation cussion on PPPs exists in rarity, some uniformity is
has largely been the need to improve efficiency, emerging. PPPs have been majorly implemented in the
equity, governance, improve development and developed world, where their origin is traceable (Ball,
eradicate poverty (Smoke, 1987). Heafey & King, 2007). PPPs are financed by a
combination of user fees and government transfers, for
As a key character of decentralisation, local gov- instance where the stake owns equity in a special
ernments are expected to provide infrastructure that purpose vehicle (SPV) or situation where government
is necessary to support it. In addition, LGs pro-vide a comes in to provide pay when demand risk sets in. While
menu of services including water, primary and PPPs have been adopted in the developed world and
secondary education, bus and other public concentrated in the central government service delivery
transportation services, fire management services, context, the appreciation of value and adoption of PPPs
garbage collection and treatment, parks, enforce- has spread to the developing world and is no longer a
ment, social assistance, and probation services. neighbor but part of the family of national policy and
Much public infrastructure is old and needs to be service delivery options.
replaced (Boardman & Moore, 2020:61). While in
other spaces, the bulk of the infrastructure needs to 3. Theoretical Lens
be extended for the wider population of citizens. The
cost of providing new or refurbished infrastruc-ture The investigation is underpinned by the theory of
continues to increase and, at the same time, many decentralisation. According to Tiebout (1961) and
voters continue to oppose license fee and tax Mudyarabikwa & Regmi (2014), decentralisation depicts
increases. Central cash transfers to local govern- the act of the transfer of power to make choices at a level
ments continue to reduce as populations served by where the masses to be affected by decisions reside. In
local governments increase. fact, it is noted that sustainable

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decentralisation takes three forms, namely polit-ical, at local government? What are the benefits of PPPs
administrative and fiscal (Conyers, 1984; at local government? and What are the challenges
Prud'Homme, 1995). In line with the decentralisa-tion faced by PPPs in the local government context? In
theory, governments worldwide have largely the proceeding section, the approach and meth-ods
transferred the power to make choices of citizens at used to answer the research questions are provided.
LGs. Jütting, Kauffmann, McDonnell, Osterrieder,
Pinaud & Wegner (2004) argue that decentralisa-tion 4. Methods and Methodology
can improve the efficiency of service delivery.
Arguably, this is because of the benefits attached to This study adopted an exploratory design where case
decentralisation arising from the ability of citizens to study methodology is adopted. The bounda-ries of
make decisions that determine the path to how they the study are limited case studies that reside with
are governed and prosper (Tiebout, 1961). While it information on the applicability of PPPs in a local
was assumed that LGs would become fiscally inde- government context. This approach adopted in this
pendent due to fiscal decentralisation, this has not investigation is justified by Seawright & Gerring
happened despite reducing central transfers to local (2008) who argue that by limiting boundaries for
government. instance to case studies, in-depth information rather
than providing a representation of a bigger popula-
For instance, Martinez-Vazquez (2011) reveals that tion can be more important. Flyvbjerg (2006c) argues
while governments score highly on political and that "case study research which is geared primarily to
administrative decentralisation efforts, they score low on hermeneutic problems may be of generalised
fiscal decentralisation which puts local admin-istrative importance in so far as it serves to elucidate the
units and subnational government danger in serving nature of agents' knowledgeability, and thereby their
citizens at the grassroots. Countries in conflict and post reasons for action, across a wide range of action-con-
conflict nature have had more trouble with fiscal texts." This relates to the principle of transferability in
decentralisation ills (Jibao & Prichard, 2016). This research, where research findings of a particular
explains why it was predicted by earlier studies; for qualitative case study might be theoretically and
instance, Rothenberg (1970) predicted that if analytically generalised or transferred to other simi-
decentralisation is not implemented in full, then lar cases or contexts outside the study (Rule & John,
subnational governments are likely to encounter 2011; Maree, 2012). Thus, the key issues identified
distress. This prediction is confirmed by Shah (2004) from the comparative analyses of selected PPP case
who argues that while governments have sought to fully studies provide insights into the understand-ing of
decentralize, they have largely retained fiscal what other local governments with similar contexts
decentralisation (Muluk, 2021) and where attempts have should consider in the attempt to adopt public private
been made to provide for fiscal decentralisation, partnerships in their service delivery models.
sabotage from the Executive arm of government has Scholarly materials and documents were reviewed.
frustrated efforts of decentrali-sation (Reinikka & The team used Google Scholar, EBSCO Host and
Svensson, 2004). This has resulted in service delivery Science Direct search engines. Abstracts that
deficiency and in some cases neg-atively affecting the contained relevant data were reviewed before the full
utility of service provision. While calls for the reads of papers that were selected to retrieve
government to extend fiscal decentrali-sation have information.
become popular, there has been limited attempt to
deliver this form of decentralisation. In this nexus, public 5. Results and Discussion
private partnerships (PPPs) are being adopted to close
the gap in service delivery at local government level. 5.1 Application of PPPs in Local Government
While this has been achieved across the world, most
local governments in Sub-Saharan Africa have not This section provides a comparative analysis of
adopted PPPs. Some of the reasons for this trend has purposefully selected PPP projects from different
been the lack of compe-tence to design, attract and sectors of local governments at global level. One
execute PPPs. This paper therefore seeks to provide emerging factor from the case studies discussed
lessons for implementing PPPs at local government below indicates that the PPP projects implemented
level. To achieve this pur-pose, the paper is guided by arose from inadequate funds and capacity by local
the following research questions, namely; How can governments and towns to sustainably provide
PPPs be implemented

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the basic needs for welfare improvement of the centres and the inability of the city to develop the area
populace. Based on the analysis of case studies in order to make it attractive for dwellers. By adopting a
sum-marised, it can be deduced that Local Lease, Build, Operate and Transfer PPP for a tenure of
Government has potential to raise revenue than 15 years, Kuantan was to attract develop-ments that
existing reve-nue collections. It is also revealed that have attracted secondary developments, taxes and
one of the assets that can be exploited to raise local revenue for supporting operations of the city
revenue and increase opportunities for residents in a administration from both the PPP investor and tenants
local government setting is land. Despite the of the facilities that were built by the devel-oper.
opportunity that land possesses, this invaluable However, it can be noted that while PPPs can be used
asset usually remains idle when local governments for redevelopment of markets, user fees may be a
do not exploit the use of PPPs as one of the fourth sensitive area and require both regula-tion and
industrial rev-olution (4IR) strategic reforms. stakeholder engagement (see case study 2). It is also
revealed that land held in trust of local authorities is one
5.1.1 Case Study 1: Redevelopment of of the assets that can be exploited to raise local revenue
Kuantan Market Area in Malaysia through PPP and increase opportunities for residents in a local
Kuatan is a town located in the Eastern part of government setting. Despite the opportunity that land
Malaysia. The Kuatan City administration wanted to possesses, this invaluable asset usually remains idle
improve the economic attractiveness of Kuatan, a when local governments do not exploit the use of PPPs
remote town. The council did not have funds to as one of the fourth industrial revolution (4IR) strategic
develop land on which market area was to be. Under reforms.
PPP, the city authority had land that it sought to
develop but faced financial constraints. It is argued 5.1.2 Case Study 2: Batu Pahat Public
that consistent with the city's development path, the Transport PPP in Malaysia
city developed a PPP project, code named Kuantan Located in Malaysia, Batu Pahat city is identified as
Central Market. part of the local authorities that have adopted PPPs
in service delivery. The authority's objectives were to
The Malaysian experience indicates that PPPs in redevelop existing facilities; provide public
land can take the form of lease, develop, own, oper- transportation; encourage better economic activi-ties
ate, and transfer (LDOOT). The case study further around and within the local area; move hawkers in an
points to the opportunity of securing PPP investors organised place to avoid obstructing traffic and to
from the locality where the PPP project is concep- improve hygiene of the bus park. While the local
tualized and is to be implemented. This is likely to government administration wanted to develop the
reduce the time lag of sourcing for investors and parks, they were limited with funding. Existing studies
associated financial closure as businessmen in the have further acknowledged funding as one of the
local PPP geography are likely to be in possession of most bothersome problems that local gov-ernments
funds necessary for the investment. In the case face in implementing their administrative career of
study, the private party was sourced from the same delivering service to their local communi-ties. While
city. The analysis reveals that PPP projects can sup- federal loans have been adopted in some countries
port local governments securing additional revenue like Malaysia (Singaravelloo, 2017), rising
from PPP. In the case study, it is noted that the PPP administrative units tend to restrain the volume of
implemented at Kuantan was able to contribute up to loans that can be accessed by local authorities.
RM2.5 million that represents 2.7% of 92 million total
city revenue collected in 2008. This finding supports Worse still, commercial loans at local government
the views of other existing studies (Forrer et al., 2010; level were discouraged while federal loans were not
Twinomuhwezi, 2018), that PPPs are pragmatic sufficient to achieve the objectives of developing the
measures for attracting special technical expertise, parks. A decision was made by the local author-ity to
funding, and innovations by the govern-ment from the use a PPP approach to develop and expand the
potential private sector partners in order to address parks. A Lease Develop Operate Transfer was
complex public sector problems. adopted. The nature of risk transferred to the pri-vate
party was majorly change of user fees and delayed
According to Singaravelloo (2017), Kuatan city payments by tenants coupled with financ-ing,
experienced problems ranging from low economic construction and operational risk. The scope of the
attractiveness, absence of attractive shopping project included; design and redevelop a

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15 storeyed complex with bus bays, food stalls, taxi 5.1.4 Case Study 4: Integrated Solid Waste
stands, public parking spaces and offices. The private Management Project (Alandur, Pallavaram
investor was given 60 years to recoup investment. On and Tambaram Municipalities, Tamil Nadu)
the other hand, the role of the local authority was to In India there is an increased demand for water
provide and lease, approve design and develop policy services. Through a competitive procurement pro-
on the use of the complex by taxi, bus operators and cess, private investors were invited to operate and
hawkers. Both parties secured benefits. The local maintain existing waste management facilities for a
authority was able to secure a quick source of finance to tenure of 10 years. In addition, package 2 that
redevelop the complex, attracted revenue through a involved a Build Operate Transfer (BOT) concession
revenue sharing model, improved organisation of was offered at a tenure of 25 years. The private
stakeholders in the market and expanded services for operators were allowed to charge locals a user fee
visitors to the complex. It has been argued that there that incorporated at 3% increase due to inflation.
resulted improvements in traffic flows and better Surplus revenue from the sale of water was to be
organisation of markets for hawkers. Henderson, Yun, shared between the private party and local authori-
Poon & Biwei (2012) have argued that organising ties at a ratio of 70:30. Both expenditures rise due to
hawkers provides benefits. For instance, it has been power and rehabilitation of the water system was to
argued that hawker centres can act as tourism centres be shared by both the private and local authorities.
(Henderson et al., 2012). Motala (2008) has also The employee costs arising due to the PPP transi-
asserted that by organising hawkers it may result in tion arrangement were to be borne by the private
organising their capabilities as they create a greater party. The fees provided by parties were discounted
chance for organised groups to access state and grant by 12%. The bidder with the highest net present
support from a wide range of stakeholders. value was awarded the concession. The benefits that
are expected at the end of the concession are new
expanded infrastructure without investment such as
5.1.3 Case Study 3: Busembatia Water reservoirs, developed water distribution network cost
PPP in Busembatia Town Council, Uganda savings on both operating and capital expenditure.
According to the World Bank (2014), Brouwer (2014)
and Rice (2015), a water PPP in Busembatia town Implications of PPPs Applicability in
council was implemented in Eastern Uganda. The water Local Government
PPP was implemented in line with priorities of the
Government of Uganda that aims at improving access The case-study analysis demonstrates that the PPPs
and use of safe water and sanitation facilities. It is are applicable to local government context.
argued that since water access has to a great extent
decentralised, Busembatia Town Council must provide 6.1 Types and Applicability of PPPs in
water to its dwellers. According to the World Bank Local Government
(2014), the government of Uganda under the
Busembatia town council awarded a 5-year By exploring the working of PPPs, this study iden-
performance- based contract to Trandint Limited that tified Lease, Develop, Operate and Transfer, and
provided a bid price of USD$270,000. The concession management concessions (rehabilitate, operate and
involved new connections, reducing water losses and maintain) as popular PPP types implemented in the
quality. The concessionaire was able to increase 24- local government context. Although these models are
hour water service access at the same water tariffs, and popular, this study concludes that the choice of
430 new concessions the 1st year of concession. It is whether PPP is a green field or brown field will usu-
also revealed that the commercial banks were not ally determine the PPP type. In essence, this study
financing such models but with the Busembatia PPP, a finds that where green field projects are to be imple-
local bank, DFCU was able to lend USD$100,000 to the mented, PPPs will usually take the form of Build
concessionaire due to the risk sharing model developed Operate and Transfer (BOT). On the other hand, if
by IFC as the transaction adviser. The trend of private the PPP type are brownfield, the form of partner-ships
sector involvement both at central and local government will usually take the form of a management
level has evolved with the BOTs attracting more private concession to rehabilitate, operate and maintain
sector spend as green field (lease arrange-ments) (ROM) or lease, operate, and maintain (LOM) or
attracting less spend. lease, design and redevelop, operate, maintain

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and transfer (LDROMT) . The study also points to the as technology delivered by the private party may
fact that where the local government has the land, provide competition and demonstration effects that
LDROMT has been implemented and created value may motivate local developers to improve their
for both the local government administra-tion and customer offering in avoidance of a potential loss of
dwellers. Drawing from existing works, it was also customers.
concluded that sectors that have attracted and are
likely to continue attracting PPPs in local government In the water sector PPP in Busembatia, Uganda, it is
are water, waste management, land, environment, revealed that PPPs in local government adminis-
accommodation, education, transport and tourism. tration usually do not provide only direct but also
Notwithstanding, other sectors like energy especially provide powerful indirect benefits. For instance, it
the off-grid solutions are likely to attract PPP was revealed that communities were able to start
investment. other income generating projects like poultry that
were hardly possible with lack of sustainable water
7. Benefits of PPPs In Local Government supply sources. Children were able to bathe before
going to school thereby improving the hygiene and
The study observes that PPPs at local govern-ment sanitation of pupils in the area (IFC, 2013).
level are quite beneficial in -service agenda. The investments at local government can provide
analysis indicates that PPPs can assist Local employment opportunities. They provide direct jobs
Governments to install new or refurbish infra- to persons employed in managing operations of the
structural assets that can consequently motivate new concession, while services offered such as parks and
development in areas that were traditionally remote. markets provide working space for other investments
By attracting new infrastructural devel-opment, PPPs by locals, creating indirect opportuni-ties. By
can attract new businesses, access to services that providing employment, PPPs enable local
may not have been traditionally available. Reflections governments to reduce unemployment challenges
on the Kuantan Market development case study which consequently can result in reduction of crime
show that by developing the market and construction rate, and improve livelihoods of citizens in the local
of market complex, competition increased, new government context.
investors to rent the complex were attracted and
services brought closer to the citizens. Access to private capital (Liu & Wilkinson, 2014) is
another benefit of PPPs. It has been argued that local
Yang & Quin (2017) asserts that PPPs in China have governments have great plans but usually lack the
been adopted to reduce the huge debt stock held by finance to implement such plans. In the developed
local governments. By engaging PPPs in ser-vice world, municipality bonds have cush-ioned limits of
delivery at local government level, exposure to debt risk cash transfers. But in the developing world such as
can be reduced and as a consequence it has been sub-Saharan Africa, capital markets have not yet
argued that Western countries and China have and matured to accommodate municipality bonds as a
continue to adopt PPPs as an alternative route in medium and long-term source of capital budget
service delivery at local gov-ernment level (Yang et al., financing for LGs. For instance, in the case of
2017). Martimort & Pouyet (2008), Maskin & Tirole Kuantan the private party was able to provide capi-tal
(2008) argue that the adoption of PPPs in service injection of RM15 million. This acted as a strategy to
delivery provides a new mechanism for funding critical improve local economic development at local
infrastructure that provides relief for already stressed government. It also provides new opportunities in
budgets and limited local revenue funding sources. terms of small medium enterprise (SME) to expand at
PPPs can provide benefits in improving service delivery local government. This helps the local authorities to
in the local government context. In the case studies from work hand in hand with local and international
Malaysia, PPPs in markets and transport pro-vided investors.
revenue with one PPP contributing to 2.7% of annual
revenue collections. PPPs can help local government Consistent with this view is that PPPs at local
administration to spur development in areas where government level stimulate public investment.
development lagged. And in some cases it can promote According to Resnick (2017a), such public invest-
local economic development ments stimulate growth of rural towns that in turn can
increase demand for agricultural products pro-duced
in surrounding rural areas, thus increasing

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rural incomes. Based on the comparative analysis, Kuantan complex, the inventor negotiated with the
insights show that successful PPPs not only deliver authority to take up space and renegotiations of rate
intended outcomes but may deliver additional pos- to make them affordable in the prevailing market
itive impact. For instance, in the Busembatia water conditions. While this can be done, it may impact on
in Uganda, the water PPP that was aimed at the return on investment and concession period. As
delivering water quality and access, provided water an incentive, the authority should trade off extension
that became an input for poultry farming, reduced of the concession period with the reduction of fees for
school absenteeism as water was available for pupils users. Such practices have for instance, been
who were traditionally chased from school for not implemented in Uganda's Bujagali HPP where tariffs
bathing. By staying in school without inter-ruptions, were reduced for an extension of Build Own Operate
school outcomes such as pass grades are argued to Transfer (BOOT) concession from 30 to 35 years
have improved (IFC, 2015). (Nduhura, 2019).

Challenges Faced by PPPs in The study further notes that the existing global attack
Local Government by COVID-19 that has resulted in lockdowns is likely
to manifest as a challenge to PPPs both at central
Despite the benefits that PPPs deliver at local and local government. Such lockdowns are aimed at
government level, they are prone to challenges. avoiding the spread of COVID-19 that is claiming
While existing literature identifies both user and lives. Lockdown has come with restrictions on
government pay models in PPP concessions and mobility that are reducing general aggregate demand
operationalization, this study found that the user fee for goods and services across the world. This
pay model is more appropriate for the local gov- situation exposes PPP concessions to risk of
ernment context. According to Shang & Aziz (2020), backlogs of arrears, reduced demand and associated
user fees are demand based. Under the user fee demand risk exposing further some con-cessionaires
payment mechanism, the user of the service pays for to the big deep, bankruptcy. Resorting to the win-win
it directly. On the other hand, government pay models negotiations that take into account mutual interests
are where a government or public entity pays for the of both the users and private par-ties can help to
service produced by the private party and assumes keep PPP concessions afloat. While negotiations are
citizens as users. The key performance criteria for the key to securing short and medi-um-term outcomes,
public party are ensuring that the service contracted consideration of bailouts for
for is available for use according to agreed prescribed concessionaires at central government level cannot
times (Shang et al., 2020; Jin, Zhang & Song, 2020). be ruled out if concession firms or rather
SPVs are to stay competitive as argued.
Since local governments are faced with financial
constraints unlike Ministries, Departments and Agencies The study also notes that PPPs knowledge capacity
(MDAs), they are also unlikely to possess capacity to constraints exist at local government level (World
pay for services enjoyed by citizens and dwellers. The Bank, 2016; Twinomuhwezi, 2018) . While private
study notes that attempt to increase user fees are likely developers lack financial capacity, local adminis-
to result in resistance. However, this can be managed trators also lack capacity to identify and design
through negotiations and stakeholder engagement pipeline projects alongside the inability to develop
where the citizens of the local community are a key well- structured concessions and negotiations. They
stakeholder. Where user fees are unaffordable in the can reduce this gap by developing partner-ships with
short term, the local authority should explore options to strategic partners such as the World Bank and
provide subsi-dies in the user fees paid to access and credible transaction advisers. The culture of late
consume service. The analysis of the study also points payments is common with user pay public sector
to the view that external shocks such as economic models. While this is common, it may not be tolerated
reces-sions may negatively impact on the PPP when the management of the public facility reverts to
concession. Revenue may fall below forecasted, and the private sector. This is at times due to the loan
inability to pay user fees or delays in payments due to repayment schedules that are fixed and any failure to
effects of a bad economy. In such cases there would be comply results in fines in form of additional interest
a need for renegotiations. For instance, in Malaysia's that erodes the rate of return for the private party. In
the case of the Kuantan market redevelopment area,
it has been observed

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that late payments negatively impacted on opera- are familiar with "the type of guarantees" to pro-vide
tions and maintenance of the facility. In this case the to the private investor, they are often unsure of the
property manager did not pay electricity bills and "amount" that should be given as guaran-tee (Xu et
electricity was cut off by the national electricity al., 2016). This has resulted in what is termed as
supplier, disrupting elevators, lifts and air condi- "benefiting the private investors" as the government
tioner services. This resulted in legal suits against the provides them with too many guarantees. By giving
property manager by the council. Notably in their excessive guarantees, the private party can become
defence, the property manager argued that the failure complacent in delivery while expecting high returns
by tenants to pay their dues in time had frustrated from investment due to guaranteed protection of the
their efforts of maintaining the facil-ity to a level local government (Wibowo, 2004).
desired by the tenants and council. However, through
negotiations, the tenants were able to make payment
thus enabling the reconnec-tion of electricity as well This study also reveals that PPP projects and agree-
as restoration of hygiene. It can also be deduced that ments are commonly characterized by information
each party must meet their obligations if PPPs are to asymmetry and mistrust, which partners take advan-
succeed at LG. tage of to avoid fiscal check-and-balances (Engel,
Fischer & Galetovic, 2020) and exploit other stake-
Local governments are known to be faced with holders. The exploitative behavior mainly by the
unpredictable economic conditions (Singaravelloo, private party is a common transaction vice, which is
2017). As cited in the case of Buatan, due to eco- an outcome of information asymmetry in the PPP
nomic recessions, some blocks at the local market implementation processes.
complex (Singaravelloo, 2017) remained empty
hence negatively impacting on return of invest-ment In light of the challenges pointed out, the current
for the private party. This view with the view of study recommends for sensitization and capacity
Shrestha, Chan, Aibinu, Chen, and Martek (2017) building of local government staff on the working of
asserts that economic conditions in which PPPs PPPs. Governments are also advised to adopt win-
operate are also unpredictable and unstable, and win mentality in PPP agreements by ensuring clarity
thus make PPPs risky ventures. Other challenges and simplicity of terms and conditions con-tained
have been cited. For instance, in a review of PPP therein. To enhance sustainability of PPP projects,
pro-jects associated within two water supply plants, opportunities for flexibility in their imple-mentation
two sewage treatment plants, two power supply should be provided while insuring them against
plants, two highway projects, and two bridge projects environmental, economic and political risks and
(Xu, Yeung & Jiang, 2014), it is argued that uncertainties for resilience amidst unprece-dented
administration at local government level has been shocks like the COVID-19 pandemic, which has
critiqued for giving excessive guarantees. taken the world by storm (WHO, 2020). It is also
important for local governments to provide and
Existing studies have blamed the uptake and suc-cess acquire all the necessary support to enhance
of PPPs generally on the lack of an enabling legal and effectiveness in the implementation of PPP projects
regulatory framework (Ndandiko, 2006; Hodge & or policies. This can be done by attracting political
Greeve, 2007). In Uganda like other sub-Saharan support from the ruling wing; enforcement of action
countries Kenya, Tanzania, Rwanda, South Africa, and points agreed upon by PPP concessionaires to reg-
Botswana, effort has been made to develop and ulate the performance of projects.
implement policies, laws and regu-lations to support
PPP implementation. In Uganda, the PPP Policy was The study findings provide knowledge on PPPs,
passed in 2010, the PPP Act came into force in 2015 which is not only vital for better understanding of the
while regulations were devel-oped in 2018 and working of PPPs in government but also lessons on
presently being implemented. While MDAs continue to how administrative grief can be mitigated. The
submit and implement PPP projects, PPP information generated on PPP adoption contrib-utes
implementation at local government level is lacking to the possibility of optimal service delivery at local
despite the recurring view that PPPs would deliver government where the majority of citi-zens reside and
greater impact at local government due to the masses position their future hopes with optimism. Therefore,
that such administrations serve. It is further revealed this paper contributes to future compendiums of the
that while local governments practice PPPs in local

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Local Government: Practices and Lessons for Delivering Services Through Public Private Partnerships

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