(EID-027) “OUTSOURCING FOR LOCAL DEVELOPMENT”

Business Process Outsourcing (BPO) is an approach that all Local Government Units (LGUs) should consider using. Although the Build-Operate-Transfer (BOT) scheme predates BPO as an approach, the two approaches have certain parallels, so much so that local government business processes could actually be outsourced using the BOT scheme.

What is the relevance of the combined BOT-BPO approaches to the local development advocacies of the United National Integrated Development Alliance (UNIDA)? Without any doubt in my mind, all the advocacies of UNIDA, namely Shelter, Health, Agriculture, Protection and Education (SHAPE for short) could actually be outsourced to the private sector, because these are all business processes in truth and in fact.

Originally introduced in the Philippines, the BOT scheme enables local and national governments to implement projects without any cash outlay. The BOT scheme is very attractive to private sector project proponents, because it enables them to earn profits from secured contracts.

In the case of projects at the national level, project proponents would usually require sovereign guarantees. In the case of projects at the local level however, project proponents would certainly welcome the assignment of local receivables from the Internal Revenue Allocations (IRAs) of the local governments, which is already being practiced right now.

Comparatively speaking, the physical frameworks for outsourcing shelter, health and education projects are easier to define, because these are obviously just the human settlements, health centers and schools that could be built and operated.

Although much more difficult to define, agriculture and environmental protection projects could also be outsourced. There may be no examples to look at now, but it would not be far fetched for project proponents to build and operate farms, ranches, fishponds and orchards as well as sewage treatment plants (STPs) and materials recovery facilities (MRFs), eventually turning these over to the LGUs.

As a service to both the private sector and the local governments, UNIDA and its member organizations would be more than willing to facilitate the processes of introduction and negotiation, so that we could all move forward in this regard. This offer is open to all local governments in the provincial, municipal, city and barrio levels.