Public Services: Lifelines in Crisis
Omar Ghannam explains how privatization drives inequality, bankrupts families, and why rebuilding strong public systems is the path to justice.
Health is not a Luxury
Eight months ago, a friend of mine suffered a sudden cerebral hemorrhage in the middle of the night and was rushed to the hospital. After the emergency staff stabilized him, they asked me to pay 15,000 EGP ($300 at the time), roughly equivalent to an average salary in Egypt for two months, to admit and test him. Before I started running around to find the money, I asked if that was all they needed. The receptionist said, “For today... if we don’t need any more tests.” While my friend recovered, we reviewed the bills with friends in the medical field, as families in Egypt can be bankrupted by a short hospital stay. The rates were exorbitant: it turned out that the $300 only covered the room rent. All medical procedures and medication were extra and charged at exorbitant rates: bedspreads, for instance, were charged at 50 times what they cost the hospital. Suddenly, it became clear why my parents’ generation — which enjoyed access to public services before austerity gutted them —is significantly healthier than my own.
Access to free, quality public services is a precondition and catalyst for development and growth, and a critical part of economic and political life. Yet Egyptians now often look to the costly private sector services that should be free. In 2018, spending on the private sector accounted for approximately 71% of total health expenditure in Egypt, with out-of-pocket payments comprising 62% of the total. The consequences of this became even more apparent during the COVID 19 crisis, as the private healthcare sector failed millions of Egyptians.
Savings, Sickness, and State Failure
Egyptians are haunted by memories of hospitals discharging the sick while still infectious; fears of losing to precious oxygen once money ran out; insurance claims getting rejected; and arbitrary hikes in hospital charges at a time when people needed healthcare the most. There are countless stories about families losing their lifetime savings —and sometimes even their homes —to ensure a loved one could spend a couple more weeks in the hospital. This suffering was wholly preventable if the public healthcare system was adequately resourced, but its funding has never exceeded 1.5% of GNI in the past decade, despite the 2014 constitutional mandate setting a minimum of 3% of GNI for healthcare expenditure.
Egypt was not alone in this. Nor was this merely a legacy of the pandemic, which is now behind us. In 2017, before the pandemic, almost a third of households were already facing catastrophic health expenditures; and 7% have been pushed into poverty due to high out-of-pocket payments. Without guaranteed public services, even if you work hard and save all you can, your savings could be wiped out by an illness in the blink of an eye. And even if you yourself don’t fall ill, someone in your circle might, a friend, relative, or a colleague, and mutual aid could be called upon to bridge the gaps left by State failure. Savings become critical for your sense of safety when you cannot rely on free public services. This harms well-being, and eventually also depresses equitable and inclusive growth.
I have experienced how municipalities in Egypt that received access to public services early after independence still have better living standards, more businesses, and higher levels of education today. This public investment in necessary services for the community allowed people to save and invest in small projects, enabled their children to have better opportunities to learn and thrive, or and helped residents simply enjoy themselves on holidays. That is all in addition to providing an extra layer of protection —a crucial addition in this time of poly-crisis, where the pandemic, environmental collapse, and an increasingly unstable international economy have quickly eroded the living standards of millions around the planet.
The Mystery of the Missing Trillions for Development
Why did governments that once prided themselves on addressing the well-being of their citizens seemingly withdraw, leaving them at the mercy of the market? Scholar David Harvey argued that as neoliberalism took hold and wealth increasingly shifted upward, big business faced a problem: it became harder to make profits because most people had less money to spend. To keep making money, capital started moving into essential services like healthcare, education, water, roads, and sewage—areas where demand stays high no matter what. This means ordinary people get hit twice: first, they’re left poorer by the wealth shift, and then they have to pay more for basic services that used to be publicly provided and often were free.
Harvey is not alone in this analysis. Even figures associated with neoliberalism, like Larry Summers, seem to understand this dynamic of reduced demand and stagnating living standards. This is why Egypt is far from alone in facing this challenge. The alternative is the tried-and-true method of fueling development through a public-first approach to service provision. Its value is particularly clear when we take stock of how massively off track the Sustainable Development Goals have become, and how many countries are still doing a terrible job ensuring access to essential services. Only 16% of SDG targets are on track to be met by 2030. Despite endless conversations about empowering communities, enabling small enterprises, and reducing poverty, we’ve seen little improvement – notwithstanding the massive gains for the 1%, whose wealth is up by at least $33.9 trillion since the SDGs were agreed.
Much of the development community has looked to the private sector to fund the SDGs in a misguided quest to turn ‘billions into trillions.’ Instead, in 2022, the private sector provided only $62.4 billion of the $450 billion spent on the SDGs. In 2023, only $87.9 billion of private finance were mobilized to low-and middle-income countries—a meagre sum considering the financing gap estimate of $4 trillion every year. The failure to achieve the dignified life that the SDGs promised, and the insistence of multilateral development institutions on a counterproductive paradigm, has rendered many international development initiatives essentially exercises in futility. This is why Oxfam has condemned the private finance takeover of the development agenda, and a failed ‘billions to trillions’ approach that seeks to enshrine corporate capture as the status quo.
The Case for Public Power
Public services are a human necessity and a human right that should be available for everyone. It is a core obligation of governments to protect their citizens. The private, for-profit sector has a very poor track record on equity while trying to deliver services to the poor. Oxfam’s research on the role of the private sector in healthcare provides clear evidence that this is the case.
Some claim that the public sector is often inefficient. One can argue that delivering equitable, quality services to all citizens is a moral responsibility that goes beyond the need for efficiency. However, there is abundant evidence pointing to private provision of public services being less efficient than public options and often excluding the poor and vulnerable. It can seem like the main factor driving narratives about private sector superiority is profit-seeking.
If the evidence says public services are often better for development, and theory tells us something similar, why do universal public services receive so little attention? The answer, quite simply, is private profit. Our recent briefing paper, From Private Profit to Public Power: Financing Development, Not Oligarchy, highlights how investors push for private financing of development, not in pursuit of expanding access to public services, but rather for guaranteed profits and public subsidy of said profits, often at higher costs to the public.
The good news is that we already have the tools, knowledge, and proven models we need. This isn’t about chasing some untested utopian ideal- it’s about putting into action a practical, proven approach to building an economy that puts people’s needs before profit, an approach that springs from the understanding that solidarity embodied in the public provision of services is the surest way to protect people in times of crisis. The only thing standing in the way of a future where public services are guaranteed is the need to organize and build the political will to reclaim our rights.
ENDS.
Author: Omar Ghannam is Senior Policy Advisor at Oxfam International.
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The forgotten summit
This week saw the World Social Summit (WSSD) in Doha, Qatar, the first time the UN has held a summit on social services, like education, health or social protection, since Copenhagen in 1995.
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