prison privatisation in south africa issues, challenges and ...

Prisons in South Africa are over-crowded, under-staffed, ill-designed, and structurally
deteriorating. The Department of Correctional Services cannot contribute towards the
rehabilitation of criminals without the necessary facilities and resources. The government is
already struggling to keep spending down and provide public services, and cannot provide
additional funds to the department. Also, the voting public is usually not in favour of spending
more money on prisons when other less controversial areas such as schools and health care
need attention. In light of increasing prison populations and the lack of funds available,
governments around the world are turning to private sector involvement in providing correctional
services.
Privatisation
The term ‘privatisation’ means a number of things. In its simplest form, privatisation refers to the
once-off sale of public assets to the private sector. An example would be the sale of a
government-owned business such as an airline to a private company who then operates the
airline for profit just as any other normal business. Privatisation can also refer to a process of
involving the private sector, both profit business entities and non-profit organisations, in the
provision of government services. For example, a government department might provide
housing and food for homeless people, hire a company to provide job training, and allocate
funding to a charity which provides drug rehabilitation and mental health counselling. In this way,
a combined involvement of government, business, and non-profit entities ensure that a public
need is met.
Privatisation became a common theme for governments during the 1980s when political leaders
praised the efficiency of markets over the waste of the public sector. As early as the 1940s,
however, US President Woodrow Wilson commented, "...there has been very little serious effort
even yet in the direction of making the government of the United States as efficient as a
successful business organisation would be."1 The rationale for privatisation is that the
introduction of profit incentives and competition will bring about a better quality service at a
lower cost. This reasoning is based on the economic theory that the market system maximises
the efficient use of resources.
While private businesses operate in a market system, most governments spend and receive
funds through planned collection and allocation. Governments decide how much revenue they
will collect from their citizens, and how those funds will be allocated. The laws of supply and
demand have little to do with these allocation decisions. While inefficient governments can
continue to operate and self-perpetuate, an inefficient or poorly managed company will not
survive in a competitive free market. The government system of central planning can magnify
and entrench mistakes in spending, whereas competition will serve to isolate and minimise
those mistakes. Public service institutions operate on budget incentives, where a department
which does not spend its entire budget will then have its budget reduced. On the other hand, if a
department spends its entire budget, then its budget is more likely to be increased. In this way,
bureaucrats are rewarded for increasing the size of their programs but not the results of their
efforts. They are rewarded for simply doing, not accomplishing.
The success of any business depends on its ability to anticipate and respond to shifts in public
demand and to meet that demand at a price which the public is willing to pay. A company which
consistently fails to respond to demand and wastes resources will not stay in business. The
intention of most privatisation programmes is to introduce this same level of responsiveness and
cost-efficiency into government service delivery.