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Public service mutualisation: The Bangladesh perspective

M S Siddiqui | November 15, 2017 00:00:00

Government-managed public services today face both short -term and long-
term challenges. Inefficiency and corruption of stretch their services along
with limited resources in short term. The changing society's increasing
demand for services is the long term challenge, since both fund and
innovative services are not available from government departments.
Government employees are unable to cope with the technological change.
They are trying to render obsolete and traditional forms of service delivery.
This is a major challenge for the government. The government service
sectors like water, sanitation, energy, medical service etc are managed
under financial and technological assistance from donors. The donors are not
focusing on non-government organisation (NGO) and diverting their
technology and funds due to corruption, inefficiency and orthodox mentality
of bureaucracy and policy makers.

Unfortunately, the government is often not keen to provide many things, even
some basic needs of life, guaranteed by the Constitution. The government
has created Dhanmondi, Gulshan, Baridhara residentia l areas by evicting
poor people and acquiring their land by paying them a very low price. It
developed the land and sold it to the privileged class at a throwaway price.
The government sells land for Tk 10 million, while the actual price is Tk 100
million per decimal. On the other hand, the donors, NGOs and service clubs
are building shelters for poor people in remote areas in the country with
funds raised from the donation of members and overseas donors. These
organisations also have partnership with gover nments in different countries
for such activities.

The governments of developing countries are now forced to explore and

consider the role of independent providers, including the community sector,
and social and private enterprises, in public service deliv ery as potential
areas for reform.
There is a long history of social services from the dawn of civilisation. Many
people are remembered for their philanthropy. Many services are hard to get
from the government and are beyond the means of individuals.

Philanthropists, ready to sacrifice personal wealth and time and comfort for
the welfare of humanity, provide these services. Kind people take the
seriously-ill people to hospital, help poor people construct their shattered
homes after natural calamities or cam paign for creating awareness to avoid
disaster, or provide free-education to under-privileged people. The service to
promote education, health care, environment awareness and other facilities
to improve the life of the common people are supposed to be part of
government services. The role of philanthropists complements basic state
services and provide cutting-edge innovation in service development. One of
the remarkable examples of philanthropy is Nowab of Dhaka in funding the
water and sanitary system of Dhaka city.

Bangladesh Secretariat lies at the centre of the country's administrative

activities. FE Photo

There are many trusts, Wakf estates and foundation s regulated under
different laws of the countries for bridging the gap between availability of
services from the governments and the demand of the citizens. The donors in
the developed countries prefer non-government organisations and service
clubs to deliver services to the needy because of allegations of corruption
against a section in the governments and bureaucracies of developing
countries.

The NGOs in Bangladesh are engaged in diverse activities -the same NGO
may be involved in multiple areas of operat ion including education, health,
family planning, environment, human rights, women and children welfare.
There is another alternative effort to provide services by the government,
citizens, NGOs and private companies in an organised manner. It is public
service mutualisation.
The rising social and economic need is there in an increasingly unequal
society experiencing gradual withdrawal of the state from public service
delivery and replacement of it by the private sector and other forms of
association or mutuals.
Free market has tactics to achieve targets or the application of market
mechanisms but the emerging big corporations also at one stage dominate
the sector and hardly consider the need of the citizens. As a result, mutuals -
with their inherent capacity, through democratic legitimation and voice to
address the problems of accountability and power - are understood to be
fruitful mechanisms in rendering public services in new ways.
This may also be termed social enterprise partly, because the concept i s
generally used to depict a wide range of very different organisations -
including charities, service recipients, and private firms that are seeking to
deliver social services. Generally, social enterprises refer to businesses that
have a social purpose, rather than relating to any particular corporate form or
style of ownership. The widely-discussed social business also refers to some
kind of public service mutualisation.

This hybrid model - of being owned by 'members' who represent all

'stakeholder interests' - is the corporate form adopted for example by Gono
Shastha Kendro or Grameen Bank in Bangladesh. These are owned by
service recipients, salaried staffs, government etc. The model may be a
particular mutual model in which employees have a stake alon g with one or
more partner organisations. This can combine the improved productivity
associated with stakeholders' ownership with additional expertise and capital
investment.

The mutual enterprises give communities more power to decide on the policy,
encouraging people to play an active role in their communities. It can
successfully transfer power from central to the local government and support
the mutuals to become more engaged in the delivery of public service.
The employees may oppose the idea due to fe ar of losing authority over the
service. Indeed, staffs are extremely concerned it would not only lead to
worse terms and conditions for themselves but also may be a stepping stone
towards the eventual privatisation of a publicly -owned and publicly-governed
essential emergency service. The system may be promoted with the
ownership of government employees. Any employee -owned mutual will
enable public sector employees to own and run the services they provide.
These departments operating for health, local gove rnment and civil service
staff, involved in plans for employee -led mutuals, may become independent
operating units delivering public services gradually involving the other
stakeholders like citizens, NGOs and private companies.

The development of mutuals will also empower the local community and help
foster civic engagement and community volunteering. The service might also
be cheaper as they will be free of expensive overhead costs of bureaucracy
and reduce cost with improved efficiency due to involvement of service
recepients and reduce corruption.

Mutuals take over services usually provided by the public sector and may
allow public organisations to protect the delivery of key services in the
context of significantly-reduced funding. It may inspire ownership, efficiency,
effectiveness. The efficiency, effectiveness and equity ensure delivery of
excellent services to meet the needs of the community. Public services are to
be delivered against a complex social and political background of
collaboration, partnership and accountability.

Funding can be focused on priority areas, with the community and voluntary
sector providing other services. Mutuals might produce more tailored and
effective services as service users/the community/employees might have a
greater appreciation of need.

Mutuals are very successful in some countries. One study in 2010 reveals -
there are mutuals at work - small and large - throughout the UK's social
fabric. There are 4,800 independent cooperatives in the UK owned by more
than 11 million members. W ithin the North East Region there are successful
mutuals and social enterprises operating across a range of different sectors -
including some which have been recognised with national social enterprise
awards. Some of the better known examples nationally include the a
consumer cooperative embracing banking, insurance, farming, retail,
pharmacies, travel and funeral care.

The UK government has some remarkable mutual organisations with success

to provide due services to the citizens. They are : (1) The London
Partnership - a 'reducing multiple disadvantage' Community Interest
Company (CIC) from a group comprising Department of Health, local
authority, Primary Care Trust and NHS staff, (2) The Department of Health's
London and SE Learning Disability Team forming a regional CIC, (3)
Hammersmith and Fulham Children's Services, (4) a social enterprise for
delivery of housing support services to vulnerable people in Mansfield, (5)
The Lambeth Resource Centre supporting people with physical and sensory
impairment, (6) NHS employees forming a social enterprise to provide
services for homeless people in Leicester , (7) Teaching and administrative
staff to set up a Trust to run Newton Rigg Agricultural College, Cumbria, (9)
Borough of Kensington and Chelsea to examine different models of
employee-led youth support services, (10) Integration of Community Health
and Adult Social Services in Swindon into a cooperative, etc.

Some UK service providers have been converted to company, for example,

Newcastle-based Eaga is one of the UK's leading providers of energy
efficiency solutions, and the leading deliverer of UK government's fuel
poverty programmes. It had a turnover of 3/4 billion in recent time.
Established as an employee-owned social enterprise it has more recently
floated on the stock exchange. However, 50 per cent of its share capital is
still owned by its 4,500 employees, together with a stake in the company held
by the Eaga Partnership Trust which is Eaga's largest single shareholder.
Mutual is not a theoretical concept only but also has global recognition. The
International Cooperative Alliance, the apex organisation for cooperatives
worldwide recognises the following seven governance principles for mutuals:
i. Voluntary and Open Membership, ii. Democr atic Member Control, iii.
Member Economic Participation, iv. Autonomy and Independence, v.
Education, Training and Information, vi. Cooperation among Cooperatives,
vii. Concern for Community.

Mutuals can be governed and legally constituted in different wa ys. The

majority of mutuals exist as companies limited by guarantee. Ownership of a
mutual can be direct or indirect. Direct ownership means employees/service
users/ the community purchase or given shares. Indirect ownership means
the relevant equity is placed in trust or other type of mutual society, which
acts on behalf of the employees/service users/ the community.

The social business is widely discussed due to involvement of Dr Yunus .

Social enterprises operate strictly as mutuals or cooperatives. The trustees
or directors of the company will normally be elected by members, but they
will be publicly accountable for the pursuit of the company's objectives.
Mutuals having values, principles and practices are particularly fruitful
enablers of voice and participation, bringing stakeholders into the heart of
accountable and open public service delivery.

It may be difficult to persuade public sector employees to form mutuals, if

they offer no extra guarantee of stability or job security. Mutuals are subject
to the same market pressures as normal businesses and may fail. While
normal shareholders have the option of selling their shares, if they sense the
business is failing, employees do not have this option.

Successful mutualisation of services requires energi sed, enthusiastic and

capable staff to identify services that may be suitable for mutualisation
themselves. It is important that the employee or a group of employees
demonstrate entrepreneurial and business management skills and that they
have given due consideration to the range of risks that exist in such a
venture.

There are at least two potentially conflicting motivations behind the current
proposals for this new approach to public service delivery. The first is to
enhance employee commitment to their organisation and to its future, and
hence to their work and to the quality of the goods and services they are
providing. The other motivation is to cut costs so as to reduce public
spending.

Private sector organisations should be speaking to their public s ector clients

to understand which areas they are considering to provide a mutual service
and then being innovative.

Bangladesh is in a transition period handing over the responsibilities of

production and distribution of services to the private sector. NG Os are also
taking over some of the responsibilities in their own fashion with the help of
foreign donors. These transfers are mostly donor -driven. The developed
world is not only depending upon the private sector but also involving all
stakeholders in the services sector. At this stage, Bangladesh needs
legislative, policy and regulatory changes to pave the way for public service
mutualisation taking the experience of developed world into consideration.

The writer is a Legal Economist and pursuing PhD in Open University,

Malaysia.
shah@banglachemical.com