The issue of capture and the failure of free public services

Day Two of the ERF 20th Anniversary Conference explored comparative experiences of social justice and provided participants with a highly informative and enriching second plenary session. Chaired by Heba Handoussa (Egyptian Network for Integrated Development and ERF), participants heard presentations by Shantayanan Devarajan (World Bank), Mahmoud El-Gamal (Rice University and ERF) and Carlos Eduardo Vélez (Universidad de Los Andes, Colombia).

The first speaker, Shantayanan Devarajan presents the issue of capture and the failure of free public services.

Around the world, countries establish constitutional rights and conditions governing the welfare of the poor. Those who are rich can get such rights without constraints largely due to increased political advantage and the ability to ‘capture’ the distribution of public goods. Shantayanan Devarajan presented case studies that highlight how the nature of free public services promote elite capture in the developing world – a key cause of breakdown in provision. His presentation focused mainly on African and Asian countries, namely Mali, Gabon, India and Indonesia respectively.

Education was the first ‘right’ to be discussed. In India, the situation in rural areas is rather disturbing. Although the country is growing, educational learning outcomes are still declining. Rates of teacher absenteeism have been found to be at a level of around one in four across the subcontinent. What is odd about such a finding is that though they are absent, teachers are rarely sacked. This was attributed to the fact that many run election campaigns for local officials. In Health care, the example of Gabon was used. Despite being a major oil producing country in Sub Saharan Africa, the country holds the second lowest child immunization rate in Africa.

As for water, and its importance for life, India’s case highlighted further disparities. With no city in India on a 24 hour water supply, the government decision to subsidise water as constitutional right effectively turned water services into business. In India, water is more of a ‘commodity’ purchased and sold, rather than a right or a service offered by the state. The result? The poor end up buying their water at five to sixteen times the price set by the government. On this issue Devarajan commented “being poor is expensive” and “we are allowing the system to be captured by the non-poor at the expense of the poor.”

Devarajan’s message was that attempts at social justice (free health, free education and subsidised public utilities) have backfired for the poor. It is backfiring because of elite capture. Governments are unable to monitor spending. They cannot hold suppliers accountable and citizens can’t hold government accountable. The solution, he says, may lie in access to information so that people can hold governments to account.  “Giving poor people the choice instead of forcing them to take free services, makes them active participants in the quest for social justice.”

Devarajan’s full powerpoint presentation can be found on ERF slideshare account.

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