G2B or government to business partnerships are contracts between private business organisations and government agencies. Also known as a Public-Private Partnership (PPP), governments enter ‘Special Purpose Vehicles,’ (SPV) to provide public assets or services to the general public.
Historically, government to business partnerships have been contractual. They were agreements between public agencies and private organisations. In such a partnership, the government and private parties share resources like financing, labour, wealth and supervision. The SPVs thus formed harness skills of both sectors to deliver services for the citizenry.
In the past few years, these partnerships have attracted both practitioner and academic interests. Today, governments across the world are increasingly turning to private sectors for meeting developmental goals. They are looking towards G2B partnerships for financing and provision of public infrastructure and services. There is a strong consensus that such ‘partnerships’ ensure better outcomes for infrastructure and services. They do it at ‘optimal’ cost and risk allocation.
These partnerships are fast becoming a norm in building transport infrastructures, including highways, airports, railroads, bridges and tunnels. With municipal and environmental infrastructure as well, such partnerships are gaining force. These include water and wastewater facilities. Other areas of government to business partnerships are school buildings, prisons, student dormitories, and providing entertainment facilities.
Benefits of G2B Partnerships
G2B partnerships can be particularly effective for governments when employed to deliver infrastructure services. These partnerships are contracts between government and business. They provide public services by using private sector innovation and expertise. They also leverage private funding. When implemented under the right circumstances, these partnerships can considerably improve service provision and boost economic growth. Benefits of this partnership also include a better decision-making process and efficiency gains.
Moreover, these partnerships facilitate economic diversification. It makes a nation more competitive in building an infrastructure base. It also boosts related construction, equipment, support services, and other businesses.
The need for such a partnership is also manifold, including:
- Organising funds for refurbishing, maintaining and operating public assets
- Mounting limitations on government budgets
- Need to seek innovation that the private sector can deliver
- Targeting better risk management
According to economists, G2B partnerships increase net investment in specific industries. They also result in better growth in particular sectors. Economists feel the partnerships ensure better outcomes when private sector technology and innovation combine with public sector incentives. When that happens, they complete the designated work on time and within budget. However, there are certain risks for private enterprises. The stakes could be cost overruns, technical defects, and incapability to meet the expected standards.
G2B partnerships are the standard extension of hybrid economic systems. Presently, governments are intensely aware of their inefficiencies. They also understand the limitations regarding budgeting or financing while executing projects. Partnerships with more competent private providers of goods and services are the most viable way to promote the governmental agenda. Finally, adequate provision of public goods, including education, hospitals and roads, helps drive economic growth.