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Impact of private sector involvement on access and quality of service in electricity, telecom, and water supply sectors: a systematic review of the evidence in developing countries

What do we want to know?

Private Sector Participation (PSP) has been increasingly used for infrastructure development all over the world. However, the studies that have been conducted to determine the impact of PSP on project outcomes has indicated mixed results. The objective of this review is to synthesize the evidence on the impact of PSP, specifically on access and quality of service in electricity, telecom, and water supply sectors. Further, to limit contextual heterogeneity, this review focuses only on evidence from developing countries. While there are several review studies that provide rich and in-depth description on outcomes from different forms of PSP, it lacks the methodological and analytical rigor required for drawing inferences from the large body of knowledge/ literature. The systematic review is an attempt to address this gap. 

Specifically, this review tries to provide answers to the following questions: Does PSP influence the access and quality of infrastructure in developing countries? What are the underlying mechanisms that explain the impact of changes in access and quality as a result of PSP? In instances where the impact has been negative or insignificant, what are the impediments to PSP that prevents in realizing the expected positive outcomes?

What did we find?

  • PSP on its own does not seem to have a significant impact on improvements in access and quality
  • On the whole, when considered synchronously with other reform components, PSP is associated with more positive than negative outcomes
  • Without financial support from the government, access to poor and rural consumers are affected as a result of PSP
  • Clearly identifying the objectives of PSP would help in appropriately handling the potential trade-offs between outcomes 

What are the main implications?

  • Implementation of PSP should not be done in isolation but as a part of a broader reform strategy that includes regulatory reform and introduction of competition. PSP is not very effective in achieving the desired outcomes without corresponding changes in the market, institutional and governance structures
  • Higher improvements can be achieved in outcomes if incentives for improvements are inbuilt into PSP contracts
  • In the absence of financial support from the government PSP does not lead to improvements in access for rural and poor consumers
  • There should strong clarity on the objectives of implementing PSP given the potential trade-offs between different outcomes 

How did we get these results?

  • Study sources: Eight electronic databases, hand search of 4 journals for a 15 year period, past reviews, 5 website searches, personal communication, and cross references of identified studies
  • In-depth review: 67 studies that met the exclusion, inclusion, and quality appraisal criteria were included in analysis
  • Synthesis method: Given the heterogeneity in the studies, multiple methods used in the synthesis: meta regression analysis, count of evidence, and textual narration
  • Meta regression analysis:  Regression results from 17 studies were synthesized using the t-statistic
  • Count of evidence: The association between PSP and outcomes were counted from all the studies included in the review. The percentage of tests that supported a relationship was used as the basis for drawing conclusions about the available evidence
  • Textual narration: Content analysis approach to understand the theory of change and the causal pathway

The EPPI Centre reference number for this report is 2106.

Thillairajan A, Mahalingam A, Deep A (2013) Impact of private-sector involvement on access and quality of service in electricity, telecom, and water supply sectors: a systematic review of the evidence in developing countries. London: EPPI Centre, Social Science Research Unit, Institute of Education, University of London.

ISBN: 978-1-907345-59-3 

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