Appraisal of Public Private Partnership (PPP) in e-Governance Projects of

Bangladesh

Rownak Tahmina

Abstract: This study aims to appraise PPP in e-Governance projects in Bangladesh by comparing PPP
scenario with other countries. It is identified that Government has taken diverse approaches with Policy
framework and development of PPP Authority. But, Bangladesh is still in elementary stage in terms of
PPP maturity. Structured approach for flexible contract management, reinventing government,
strengthening financial institutes, and review of partnership to protect strategic need are recognized as
critical success factors for PPP.

1. Introduction

Equitable development necessitates inclusive and efficient delivery of public services. Electronic
government is instrumental for effective service delivery and skillful internal operation. So, e-
Governance is gaining its acceptance to both developed and developing countries for more
accountable, transparent, efficient and productive government. Substantial application of ICT in
service delivery and business process of public organization is prominent in E-governance
projects. It requires paradigm shift of organizational culture of Government agencies. Contrarily,
Private sector, is more market oriented and innovative, and hence offers ample opportunities for
state-of-the art service delivery with enhanced customer satisfaction. Moreover, financial risk
and technical expertise are transferred from private partners to public entity. Nevertheless,
private investors enjoy stable revenue inflow and policy support. So, Public Private Partnership
(PPP) appears to be a suitable solution to harness e-governance initiatives. However, the
performance of such synergy varies in diverse Political, Economic, and Social contexts. This
study aims to appraise the PPP scenario in Bangladesh by examining its quality, success, and
needs as compared to other countries. So the objectives of the study is to

i) Recognize PPP as a concept,

ii) Relate PPP in e-Governance projects,
iii) Analyze PPP in e-Governance projects in different countries,
iv) Assess PPP scenario in e-Governance projects of Bangladesh,
v) Suggest some proposition for proliferation of PPP in e-Governance projects of Bangladesh.
2. Research Methodology and Conceptual Framework

Descriptive research methodology is followed with qualitative analysis. Information is collected

from secondary sources ranging from case studies, academic literature, Government reports
etc. Collected information is generalized to identify opportunities and challenges for PPP in e-
Governance Projects of Bangladesh and some proposition are suggested for Bangladesh
contexts.

3. PPP as a concept

PPP is such a contract where private sector is assigned to deliver services efficiently those are
normally served by public entity. It is remarkably different from normal purchase in terms of
sharing risk and responsibility. Private entity does not possess any stake in the quality of
produced goods or services in normal procurement, and acquire revenue based on pre-defined
terms and conditions. Contrariwise, in PPP, the benefit and risk are divided between both public
and private entity with a degree delineated in the revenue model.

UNESCO defines public-private partnerships as "a cooperative venture between public

[government] and private [business or NGO] sectors built upon the strengths of each partner
that best meets clearly defined public needs through the appropriate allocation of resources,
risks and awards".

For instance, private entity readily assumes financial risks and modernizes technology while
Government partner is dominant in licensing, environmental clearance and other regulatory and
policy issues. So, Government can concentrate on core business strategy while private partner
caters customer centric output. Certainly, PPP entails such alliance where partners complement
each other.

4. Models of PPP

Very often, the development partner and/ or other associates of Government and synergies of
Private sectors are actively involved in the partnership. Evidently, PPP is a contract among
heterogeneous bodies. So, managing such multifarious agreement with appropriate revenue
sharing and accountability is critical for a successful outcome. Government needs prudent
decision to identify the operations to be contracted out. Because, Government must retain its
core competency of national security and credentials, ownership of resources, and interest of
the Citizen. In contrast, private sector must be attracted in terms of return on investment (ROI)
and other financial benefit. So, different revenue model along with clearly defined roles must be
developed for a win-win solution. It largely depends on the nature of goods/services produced,
and strategic alignment of the partners. These are integrated in various models of PPP based
on the strategic need, mode of operation, and sharing of risk and reward:
Type of Duration Receipt of private Nature of Contract Examples
Contract (years) sector performance
Service 1-3 Fee from Government Definitive, often Website design
Contract for performing non- technical type of and
(Outsourcing) core service service management,
ICT Capacity
Building
Management 3-8 Fee from government Manage the Call center
Contract for the service and a operation of a staffing; Seat
performance-based government Management,
incentive service Parking
enforcement,
regional water
supply
management
Lease 815 All revenues, fees or Manage, operate, Land for ICT
charges from repair, and Infrastructure
consumers for the maintain, and Development,
provision of the maybe invest in, a Online property
service; the service service to registries,
provider rents the specified Existing airport or
facility from standards and port facilities
government outputs
BOO & 15-25 The government Construct and ICT
BOOT mostly pays the service operate, to Infrastructure; e-
provider on a unit basis specified procurement
standards, the systems; e-
facilities necessary business portals;
for service Network of
provision Kiosks
Concession 1530 All revenues from Manage, operate, Telecom
consumers service repair, maintain operations and
provision; the service and invest in expansion, New
provider pays a public service airport or seaport
concession fee to the infrastructure to facilities, Toll
government and may specified road or bridge
assume existing debt standards
Table1. Common PPP Models (Source: The Institute of Public Private Partnership 2009).
It is interesting to note that, Government changes its role from provider to enabler and the
investment responsibility shifts from public to private along these models.

Private/
Investment Enabler
Responsibility
/
Public/ Government
Provider Role

Equity/deb
Traditional Service Managme
Contract Contract nt Contract
Lease BOO/BOOT Concession t/Guarante
es

Fig.1: Government Role along different model.

Based on the services/operations, public entity adopts the appropriate model, or tailors it to
organizational need. Prudency of selecting PPP model is central for successful outcome.

5. PPP in E-governance

Application of PPP in e-Governance is appealing to both developed and developing economies

for the new business approach inherent in its core components:

1. e-Administration: Automation and interconnection of Public institutes

2. e-Service Delivery: Fostering ICT for efficient and inclusive citizen service

3. e-Participation: A cohesive approach for interaction among public, citizen and

businesses to formulate Public policies and services.

Above components are inter-linked and unique to e-Governance. However, some cross-cutting
components are essential to nurture the core components:

1. Policy and Regulation

2. Infrastructure
3. Access to Information
 Policy and Regulation

e- e-
Administrat Participatio
ion n

e-Service
Infrastructure Delivery Access to Information

Fig.2 : e-Governance Framework (UNDP 2013)

It is noteworthy that all these compnents operate in local, national and International level.
Evidently, e-Governance Framework demands for active participation of multiple stakeholders
ranging from business sector, financial bodies, educational institutes, citizen and media. It leads
to collaboration of public and private partners for implementation and operation of e-
Governance project.

Digital Government requires connected government, automated business process, and leading
edge service delivery. So, from operational perspective, e-Governance framework has two
folds:

Digitized and connected organizational structure.

State-of-the art service delivery at the door-step of the citizen.

Hence, ICT needs to be well-integrated in the whole government system. So, expertise in
technology and management, and market orientation are central for deployment and
sustainability of electronic Government. Public workforce to a large extent lacks capacity in this
sector. Conversely, private sector is more customer-centric and market-oriented, and exhibits
cutting-edge technology and diverse revenue model as a business approach. So, private sector
emerges as potential partner for the Government to do business with a new approach. In
addition, application of ICT in e-Governance projects necessitates agile approach in project
design, implementation and evaluation. Rigid organizational structure of Government resists
frequent scope change, and is not efficient enough to adopt risk and change management like
private sector. So, from project management viewpoint, private sector appears to be more
competent for e-Governance projects.

However, it can be argued that if the private sector is capable and reliable enough to deliver the
services effectively and equitably. Public services must be affordable and inclusive. Cost Benefit
Analysis (CBA) to encompass marginalized community for low-cost services may not align to
private investors business strategy.

Although most of the Governments around the Globe opt for private partnership for e-
Governance, a considerable number of PPP projects ended with cost overrun, and
disappointment of both Citizen and Government. Hence, accountability and risk sharing of
private partners are critical for Government. Moreover, in growing economy, Government is
more robust in business continuity and stability than private sectors to endure financial
turbulence. So, private sector may need incentives to budget deficits in developing economy to
prevent withdrawal of private investors after ROI.

In all, PPP experience is moderate all over the World, and there is significant room for
development of such multifarious partnership.

6. e-Governance with PPP all around the Globe

India
In south Asia, India is pioneer in diverse e-Governance initiatives associated with PPP of
different models. In India, almost all the public services are delivered from a common outlet
normally known as common service centers (CSC). This CSC project opt largest participation of
private entity to develop more than 100000 CSCs uniformly distributed geographically. PPP
scenario of CSC project and e-Procurement project is summarized in table below:
 Common Service Center Project e-Procurement project
Model Service procurement Built Owned and Operate (BOO)
Investment Private 1 (one) Billion USD; Public 300 Private entity invested on solution,
Million USD technology and infrastructure
Project Stakeholders: Government, Citizen,
Incentives for Usage:
Highlight Universities, Civil Society, Media,Pilot Phase: Cost to government
Businesses, Social enterprises. with no cost to Bidders.
State Telecommunication enterprise for last
Roll out Phase: Cost to bidders
mile connectivity. with No cost to Government
Departments.
Reduced tender cycle time.
Instant access to all tenders.
Cost reduction and efficiency of
procurement.
Revenue Capital expenditure and Operational Government shared the tender
Model expenditure by private partners. fees collected from the bidders
Government provides: with the operator.
G2C services at CSCs
Program level Support
Revenue viability gap support at a
rate USD 75 per CSC per month for
4 year

Above cases exhibit a positive outcome of PPP. However, passport e-seva project experienced
some challenges in organizational level:

Resistance of employees
Perception of loss of strategic control

Malaysia
Malaysia is quite matured in substantial e-Governance initiatives for more than two decades.
Government launched Multimedia Super Corridor (MSC) in 1996 as a platform for reinventing
government. It is associated with several flagship projects like Project Management System,
Human Resource Management Information System, E-procurement and General Office
Environment intended to transform the government from the paper-based, segregated islands of
agencies and departments to an integrated and networked government. However, in the initial
stages it faced several challenges that are more related to management and planning issues.
For instance, e-Perolehan (e-Procurement) Project can be studied:
 Less involvement of Government agency in the project.
High pricing of services; suppliers complained that everything and anything were
chargeable.
PPP model is revised.
Private organization was engaged for a given period of time to establish and maintain
the online procurement systems while government officials are expected to learn and
transfer the technology.

Ghana
Ghana adopted PPP in 2010 for Ghana Revenue Authority and the Registrar Generals Office to
deliver e-tax and electronic business registration platform. The PPP was structured on a design,
finance, build, operate, and transfer model. One-third of the total project costs was financed by
World Bank while the rest was capitalized by private sector. The private sector was allowed to
build and manage the operation until their cost is recovered within five years but not exceeding
seven years. After that the Government was to continue operation.

However, this project faced several challenges:

The consultation process to validate the PPP design took over a year.
This delay overlapped with financial crisis and led to second bid that was 40 per cent
costlier than the projection of Government.
Protracted World Bank procurement processes added to delays in starting the program.
Disagreements between private partners and their sub-contractors on intellectual
property rights issues delayed implementation.

Government realized the need for policy framework, and later designed national policy on PPP
supported by legal framework. Finally, the project ended with a success in tax payment and
business registration system of Ghana.

7. PPP in e-Governance scenario in Bangladesh

Private investment in Public sector is more prominent in infrastructure projects in

Bangladesh.PPP practice is relatively new in e-Governance as comprehensive efforts for
digitized government in Bangladesh is prevailing for less than a decade. Governments strategic
plan, Vision 2021, bring about ICT-enabled Government to ensure economic development and
good governance. Bangladesh is, indeed, advancing in e-Governance that is noticeable in E-
Governance Development Index (EGDI) devised by United Nations. EGDI ranking in South
Asia in 2014 and 2016 shows maximum escalation in position for Bangladesh since 2014.

Country Rank 2016 Rank 2014 EGDI 2016 Rank

change
Bangladesh 124 148 0.3800 +24
India 107 118 0.4638 +11
Pakistan 159 158 0.2583 -1
Sri Lanka 79 74 0.5445 -5
Table 2: EGDI Ranking in South Asia (Source: UN e-Government Knowledge Database)

EGDI is a weighted average of normalized scores on the three most important dimensions of e-
government -- scope and quality of online service, the status of the development of
telecommunication infrastructure, and inherent human capital. So, it determines the PPP
opportunity of the country to a greater extent.

Government of Bangladesh has taken radical actions to foster e-Governance and Private sector
resource mobilization that are evident in Institution and Policy Framework.

Institutionalization of PPP in Bangladesh

Institutionalization of PPP is compelling for a structured and systematic approach. Furthermore,
it requires legal support and regulatory framework. With this view, PPP program is included in
Vision 2021, and in 2010, Policy and Strategy are issued by Government for PPP in both
infrastructure and service sector. Consequently, a separate PPP Authority is established to
foster fiscal responsibility and sustainability of PPP projects. It helps line ministries to select
projects suitable for PPP, facilitates resource mobilization from private sector, coordinates and
negotiates project related issues among the partners. So, it caters regulatory and supervisory
function to mediate public and private sectors.

To assess the PPP scenario in Bangladesh, some empirical cases can be analyzed.

e-Governance Projects in Bangladesh

Initially, stand-alone e-Governance activities were found in different ministries. Later, combined
efforts by all government agencies are harnessed by A2I Project under direct supervision of
Prime Ministers Office.
Union Information and Service Center (UISC) or Digital Centers are designed to deliver
diversified citizen services to union level. These digital centers are collaboration of multiple
public private entities:

local government
Union Parishad
Government (Telecommunication Infrastructure and Internet Services)
Development Partner (A2i Project)
Life Insurance Agency (Jiban Bima Corporation)
Local entrepreneurs
Banks (e.g. Dutch Bangla Bank, Mercantile Bank with upcoming online Banking
Facilities)
Mobile Operators (Robi, Banglalink)
British Council (for English Learning Program)
Non-Government Organization (Dhaka Ahsania Mission)
Private sector (Hardware maintenance and technical support)

Apparently, this synergy is more similar to service contract and government retains more
control over other partners. Nevertheless, private investment is not significant as compared to
public investment. Seemingly it demonstrates early stage of Public Private Partnership.

Some challenges faced in digital centers are recollected as

High dropout rate of local entrepreneurs.

Skill in ICT and accounting of the entrepreneurs is not satisfactory.
Marketing, Campaign and mobilization strategy is not sufficient.

Despite above barriers, these digital centers are serving integral part of citizen services, and
contributory for digital Government.

Likewise, several service delivery approaches in different levels, e.g. District e-Service centers,
shebakunja, e-tathyakosh etc. are initiated by the Government. Besides, Online NID and
Passport services, E-GP for electronic public procurement, and e-Filing system for internal
government operation are noteworthy e-governance efforts. All these services integrate private
entities to some extent, but significant private investment with specific revenue model is hardly
available in any literature.
Opportunities and Challenges of PPP in Bangladesh
Above analysis infers that PPP entails widespread benefits if applied efficiently. The
opportunities can be arranged in following matrix based on different potential stakeholders.

Opportunity for Government Opportunity for Citizen

Resource mobilization from private sector. Reduced Time, Cost and Visit for services.
Better risk management. More reliable services.
More focus on core Government business and Enhanced Customer satisfaction.
Policy Formulation. State-of-the art service provision.
Serving with cutting-edge technology.
More market oriented services.
Reduced need for technical assistance.
Efficient customer friendly approach.
Opportunity for Private Sector Opportunity for Community
Experiencing new skills required in public sector. Efficient utilization of National resources.
Exposure to a new sector and customers. Close interaction of different sectors of the
International trade. community.
More stable flow of revenue. Improvement of EGDI.
Economic Growth. Development of Competitive Market.
At the same time, PPP is subject to extensive challenges:
Challenges for Government Challenges for Private sector
Selecting the right partner. Inclusive citizen services with affordable
Managing multifarious entities. price may not yield lucrative ROI.
Ensuring accountability of private investors. Change of approach from profit orientation
Strategic alignment of all the parties involved. to community orientation.
Resistance from the public workforce. Approval of licensing and other regulatory
Perception of curtailing core competency. activities.
Possibility of lacking ownership of state assets. Access to utility services necessary for
Managing private sector to share risk. start-up.
Sharing key national data with private entity. Selecting appropriate revenue model to
Selecting appropriate revenue model to balance balance between citizen service and ROI
between citizen service and ROI of private entity. of private entity.
 8. Recommendation

To summarize, Bangladesh is stepping forward to promote private sector participation in e-

Governance projects. As both PPP and e-Governance are still emerging in Bangladesh, a
cohesive approach in diverse sectors of the Community can be proposed:

a. Reinventing Government
Enhanced capacity of public workforce in managing heterogeneous entities is essential.
Nevertheless, resistance from public workforce is common in PPP projects in perception of
losing ownership and control of national key issues. So, business process reengineering is
essential here, to ensure:

Capacity development of Public workforce on PPP.

Use of project management Tools and Techniques for project selection, design,
implementation and evaluation.
Application of Change Management to address the organizational resistance.
PPP experts in all government agencies for pragmatic decision to select what to
subcontract. Core competency of ownership of national resources and key data must be
retained within Government.
Government control on pricing of citizen services.
Active participation of Government in project activities so that it can handle it if required.
Enabling environment for proliferation of ICT and growth of private sector.

b. Selecting Right Partner

Selecting the right partner is critical success factor for PPP projects. The private entity must
have sufficient experience and financial ability to complete the task with appropriate risk
sharing.

c. Leveraging access to Financial resources

Financial resource mobilization is central to facilitate capital investment. Reforms and policy
support must be ensured to

Strengthen financial bodies,

Leverage access to credit,
Ensure transparency and accountability of both financial institutes and private investors.
 d. New approach in Contract management
PPP involves managing multidisciplinary set of private partners; the members of the synergy
may not be stable because of merger and take over. So, unlike bi-lateral contract of normal
purchase, it requires new technique to manage such spider-network. Agile approach for loose
cascading contract management can be applied in terms of

Short-termed contracts those are renewable and more flexible.

Goal flexibility to keep pace with ever changing technology.
Management framework to evaluate the performance of partnership, and change terms
or partners if necessary.
e. PPP maturity
Application of PPP in a larger scale ensures PPP maturity- essential for successful outcome.
Initially, lack of trust and reliability, and blame game persist in both private and public partners.
Institutionalization of PPP with appropriate Policy and legal framework can develop PPP
maturity. Clearly defined role, deliverables and impact assessment criteria must be defined. As
the partnership progresses, maturity develop with sharing of 3Rs:

Reward
Risk
Resources
f. Intellectual Property Rights Law must be ensured to protect the right for technology
innovation.
Best practices of PPP can be suggested for e-Governance Projects of Bangladesh according to
Diebolds Integrated Services Outsourcing as shown in following figure:
Review
Strategic
Objectives

Identify the
Measure
key process to
Result
be outsourced

Define the
Explore
process to
Partnership
outsource

Fig.3: Best practices for PPP.

 9. Conclusion

To conclude, Bangladesh is moving forward to expedite private sector participation in public

projects. Although, e-Governance and PPP practices are considerably new in Bangladesh, both
are crucial for economic growth. Investment to GDP ratio must be escalated to 35-40 percent in
Bangladesh to raise the GDP growth rate to 8 percent. PPP not only mobilize private investment
but also develops competitive market. So, PPP in e-Governance is enabler for equitable
development and economic growth. PPP practice in e-Governance in Bangladesh is still
elementary in nature. But it can create prosperous future for both economy and community, if
applied appropriately. Periodic review of partnership to align strategic objectives of the
associates is critical success factor for PPP.

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