Blog: The gender impacts of Covid-19 - An analysis of public-private partnerships in developing countries

By María Belén Villegas

The spread of COVID-19 is exacerbating social, economic and gender inequalities across the world, especially in the Global South where the persistence of patterns of patriarchy, inequality and poverty, especially in a context of world crisis, seriously threaten women’s lives and wellbeing.

As part of its commitment to opening up a discussion about the gender impacts of the pandemic, the IGDC organized the event Inequalities in Global Finance and Gender: Economic Responses to Covid-19 at the University of York in July 2020. In this webinar, Daniela Gabor and Crystal Simeoni unpacked the economic and financial consequences of the pandemic on developing economies and women in developing economies in particular as seen in other IGDC blogs on this topic.

The speakers addressed this debate in a joint presentation around the impacts of Covid-19 in the context of rising numbers of public-private partnerships (PPP) in the global South. These have played an important role in financial globalisation over the last 30 years which has driven increasing inequality. Despite this, discourses of financial globalisation have become increasingly powerful in terms of its political capacity to influence and shape discourses at a national and global level.

In the 1990s, the prevailing Washington Consensus upheld the idea that public resources were limited and should be employed as efficiently as possible, thereby promoting measures oriented towards fiscal adjustments. Today, according to Gabor, we have a Wall Street Consensus. This entails an elaborate effort to reorganize development interventions around market-based finance, based on the idea that this will help developing countries finance and ultimately achieve the Sustainable Development Goals (SDGs). In line with this, developing countries have been creating asset classes to attract international investment. These are financial instruments such as bonds or project loans centered around infrastructure. I Public-Private Partnerships (PPP) are a key element of this process. 

The risk of these asset classes is based on contracts. State performance is a key element here because once a state has achieved a good standard of institutional performance, the asset classes are more attractive. In the event in which state performance is not as good as what the private sector expects, countries are encouraged to make efforts to attract investments by offering more profitable contracts. Indeed, as Simeoni and Gabor emphasize, in some countries, the state guarantees much more than what one might expect from a typical infrastructure contract, including guarantees related to the minimum wage and currency devaluation.

In light of the fiscal and political constraints triggered by the pandemic, and the increased reliance on PPPs to fund development, what space is there for equitable development? And what effects does this process have on gender inequalities? 

What explains the rise of PPPs in the global South?

Non-resident investors, foreign banks and global financial investors have steadily increased their penetration into developing countries since the 1990s. Likewise, in the last decades, many Latin American countries have launched public-private partnerships. At the outset, these models were based on public work concessions for highway construction; they were then extended to other infrastructures and public services, such as railroads, ports, hospitals, prisons and public buildings, amongst others. 

The number of PPEs has grown in recent years, sustained politically by two major discursive drivers. 

On the one hand, the decrease in public income due to the financial restrictions of recent years caused by changes in the global economy is an important factor. After a twenty-five year decline starting in the 1980s, commodity prices grew in the 2000s (ECLAC, 2011; Levistky, 2011). The increase in China’s demand, the speculative movements linked to excess liquidity and the lack of solid and tangible financial assets, led to a price increase of commodities (mainly metals and agriculture) since 2002 and especially since the USA crisis in 2008 (Ocampo, 2009; 2019). But many of the conditions that produced a sharp boom in developing countries after 2010 have changed. There was a considerable fall in China’s demand and the monetary and trade policies of the USA contributed to downward price pressure on commodities (Erten and Ocampo, 2013). At the same time, greater commodity dependence in many countries leaves them more exposed than ever to new shocks and disturbances.  Additionally, most developing countries are experiencing rising debt servicing costs since 2012 (UNCTAD, 2020). 

On the other hand, the fear of corruption and misuse of public money has paved the way for the growth of these alliances. Corruption by many  Latin American left governments during the pink tide in the first two decades of the twenty-first century have driven arguments about the need to move towards greater “efficiency” and “transparency” which can allegedly be provided by the private sector. 

Finally, the Covid-19 pandemic is now accentuating the trend towards PPPs even more, as a lack of revenues together with weak financial infrastructure (UNCTAD, 2020) make responding to social and economic needs arising from the pandemic very challenging indeed.  

How do PPPs affect gender inequality?

Expenditure cuts triggered by constraints in fiscal revenues have a disproportionate effect on women and children. Women tend to be more dependent on social policies because they undertake a big part of childcare and usually have lower salaries as well as less stable labor trajectories (ECLAC, 2019; ECLAC, 2017). At the same time, when social services such as health, child education, and care services are cut, women have to bear the brunt of the lack of services by increasing the time they spend on unpaid work. 

Women in most developing countries therefore suffer from lack of access to multiple services. There is a close relationship between time spent on unpaid work and other non-monetary deprivation. For example, in households without clean water, the negative health effects and opportunity costs of spending time carrying water particularly affect women, who are often the main responsible for this task.

Since private investors seek a good financial return on their investment, they often tend to reduce the quality of services or increase tariffs. At the same time, PPPs payback costs often mean that governments have less money to spend on public services and infrastructure needed to support women’s rights. What is more, frequently these contracts imply that if something does go wrong, the state, not the private provider, is still held responsible for covering the costs. 

In addition, the design of infrastructure projects in cities, which are typically conducted via PPEs (paved roads, basic infrastructure) has a particular effect on (poor) women. These women depend most on public transport and non-motorised means of transportation (bicycle and walking) and who generally move around with packages, purchases and children, so the negative effects of bad planning and poor services become a highly gendered hardship (ECLAC, 2017).

Likewise, the lack of child care services affects women in a much deeper way than men. Since women carry out up to ten times men’s work in unpaid care work according to the OECD Development Centre’s Social Institutions and Gender Index (SIGI). they are more impacted by, travel restrictions, at-home quarantines, school and day-care centre closures, and strict lockdown measures for elderly which impose additional burdens on women. This is compounded by the fact, the pandemic has triggered a shift of public resources toward public health, leaving services such as sexual, reproductive, and maternal health severely under-funded. 

Governments who struggle to afford basic infrastructure and services often look to PPPs as possible options. These options can only be compatible with social and gender justice when they are supported by mechanisms, such as regulatory and accountability capacities. It is therefore concerning that those private providers are ultimately accountable to their shareholders rather than to citizens. Meanwhile, the complex and technical nature of PPPs can obscure what is happening especially because activists and NGOs tend to be excluded from the public debate about them. Information on quality and level of service, pay and conditions that determine performance is also typically extremely difficult to obtain from PPP contractors. We do know, however, that contracts are often long-term, sometimes up to 20 or 30 years, and that there are sometimes clauses that include compensation for companies in the case of strikes or protests, for example. These contracts, which are often secret, tie the hands of governments and seriously undermine both democracy and sovereignty. 

Where do we go from here? 

Given that the COVID-19 is not gender-blind, the response to it should not be either. With regard to PPEs, we should push for the introduction of mandatory gender equality impact assessments and regular, robust, and transparent reporting mechanisms, as well as private providers’ compliance with human rights and equality standards as a mandatory condition of any contract. The objectives of  PPPs should also explicitly align with macro-country development strategies, which should themselves reflect the principles of gender equity. 

We should also address the gap in our understanding of the gender impacts of PPP projects. Monitoring and follow-up mechanisms should be introduced to better understand how they work in practice.

We are now at a crossroads. The Covid-19 pandemic is boosting the use of PPPs in developing countries. It is time to strengthen our understanding and introduce regulation if we want development solutions that make lives better, not worse. 

Other IGDC blogs on this topic

• Sub-Saharan countries are taking on more debt, and women will bear the brunt of repaying it by Matt Barlow, Jean Grugel and Jessica Omukuti
• Protecting Migrants or Reversing Migration? COVID-19 and the risks of a protracted crisis in Latin America by Jean Grugel, Pia Riggirozzi and Natalia Cintra
• Displaced women and girls threatened by Covid 19 in Latin America by Jean Grugel, Pia Riggirozzi and Natalia Cintra