28 JOHAN POST
world (Burgess et al., 1997: 81-2; Lee, 1997: 141). Moreover, the argument is based
on indirect evidence to a certain extent. The poor track record of many activities run
by the public sector is automatically translated into recommendations to work in the
opposite direction, making policy into a sort of ‘trial and error’ process (Ramamurti,
1999). Second, it is far from certain whether the private sector will rise to the challenge
at all. Entrepreneurs may hold back for fear of political instability or because they
simply do not consider the provision of certain public services profitable. Third, there
is often strong political opposition to privatisation from groups that stand to lose from
the reform. There is a real danger, for example, that privatisation will lead to a net
decrease of employment and that labour conditions in the private sector will compare
unfavourably with those in the public sector. Furthermore, in the course of time,
complex webs of mutually beneficial relationships have been established between
state representatives and private interests. Many stand to lose when this edifice of
patronage and privilege is torn down and will therefore resist reform or seek new ways
to maintain the status quo, thus eroding the assumed economic advantages of privati-
sation. Finally, privatisation on the basis of the ability-to-pay principle is likely to
exclude those who are beyond effective demand. Similarly, critics fear that private
firms will eliminate unprofitable services and will provide inferior services in an
attempt to maximise profits. When responsibilities are passed on to the private sector
safeguards must be built in to ensure appropriate standards, achieve coordinated provi-
sion, ensure a competitive environment and avoid monopoly control of essential
services by private providers which are not publicly accountable, and to minimise
corruption and inequity (Rondinelli and Kasarda, 1993; Cointreau-Levine, 1994;
Rondinelli and Iacono, 1996; Burgess et al., 1997). Therefore, privatisation in service
provision usually implies a public-private arrangement in which the government
retains some sort of control, while saving on costs and reducing political interference
and red tape.
Despite the ramifications mentioned above privatisation has become the political
creed of the 1990s and its importance as a policy instrument must be accepted as a
matter of fact. Therefore, one must adopt a realistic stance when looking for condi-
tions that have to be fulfilled to allow one to reap the fruits of privatisation, while
avoiding the pitfalls. When looking at privatisation, it serves to make a distinction
between several dimensions: the form of privatisation, the type of activity to be priva-
tised, the specific nature of public goods, and the main features of the policy context.
These dimensions will be briefly discussed for the case of urban solid waste collection.
Starting with the first, each form of privatisation (divestiture, contracting, concession,
franchise, open competition) has its own particular set of positive and negative
impacts on the various stakeholders In waste collection the two methods most
commonly applied are contracting and franchise^3. In practice there are both situations
where the private sector is unwilling to work with the government under contract,
usually due to expected risks of non-payment or delays in payment, and situations