Brazil’s “medieval” prisons are now open to private investment

January 29, 2013
January 29, 2013

Officials in São Paulo have begun a roadshow to recruit investors for three prison contracts worth 750 million reals ($375 million). With the world’s fourth-largest population of people behind bars (550,000 as of June last year), Brazil’s prison system suffers from overcapacity of 178% (paywall) and is known for overcrowding and violence. Brazil’s justice minister once described them as “medieval” and said he would rather die than spend several years in one.

The project is the latest example of Brazilian authorities recruiting private investment for infrastructure projects. The state of Minas Gerais inaugurated its first prison complex to be operated through a similar investment scheme earlier this month. In the São Paulo project, companies will bid to build and operate three male prison facilities holding a total of 10,500 inmates.

These projects also offer international investors, eligible to bid for contracts, another way to access Brazil’s notoriously protective markets. The prison contracts are part of a larger package of infrastructure work funded through “public-private partnership” concessions, or PPPs. Begun in 2004 when Brazil approved a law allowing public-private partnerships in all public services, PPPs are an increasingly common way for officials to recruit private investment in everything from prisons to health care facilities. Investors make money via tariffs charged to the product’s end-user and subsidies provided by the public partner, according to KPMG (pdf, p. 48).

Could this be good for Brazilian prisons? The structure of Brazil’s private-public prisons may be similar to that of several US prisons that are operated by private companies but still owned by the state. (Under Brazil’s law on PPPs, the state is still responsible for monitoring and supervising any public service administered by a third party.)

Yet the experience of the US, where about 8% of the prison population was housed in private facilities in 2010, provides a mixed answer. Proponents argue that private companies help states carry out their penal responsibilities more efficiently and at a lower cost to tax payers. Critics say security is compromised and for-profit prisons often dodge having to house inmates with expensive health conditions, minimizing any savings for the government and in some cases costing more (paywall).

2001 report (pdf, p. 29) from the US Bureau of Justice Assistance, under the Department of Justice, concluded, “The cost benefits of privatization have not materialized to the extent promised by the private sector. Although there are examples of cost savings, there are other examples in which such benefits have not been realized.”

We have yet to see how supervision of public-private prisons will play out in Brazil, but an infusion of capital in its poor prison system might at least be worth the experiment.

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