Capacity Building on Competition Policy in Select Countries of
Eastern and Southern Africa
7Up3 Project
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7Update EnewsLetter Vol. V
Project Progress
The project has been progressing well, with research partners engaged with undertaking perception surveys for assessing the level of understanding of competition policy and law per se, and also the benefit of a functional competition regime for the project countries among three stakeholder groups – consumer representatives, government and regulatory authority officials and the business community.
Outcomes from these surveys would be analysed for incorporation into detailed Country Research Reports (CRR). Thereafter, findings from the draft country research reports would be discussed with national stakeholders in each of the project countries through the second round of National Reference Group (NRG) meetings. Comments received from the NRG members in these meetings would be used for refining the CRRs.
Representatives of the 7Up3 project coordination and management unit (PCMU) had participated in the Fifth Review Conference of the United Nations on Competition Policy and Law, held in Antalya, Turkey in mid-November 2005. This conference helped the members of the PCMU to network with senior officials of some of the competition authorities from the project countries like Ethiopia, Malawi, Namibia. Further, working relationship with the top-level officials of the Ministry of Trade and Industry of Mozambique was also strengthened. Additionally, information about the progress made through the 7Up3 project was also shared with various other key personalities both within the continent (Africa) and outside. It was observed that considerable interest was generated in the international competition community about the project. The PCMU would keep these people, informed about the project happenings through electronic means.
The dates for the regional conference of the project have been fixed on 27-28 March 2006, at Addis Ababa. The Regional Conference would provide an opportunity to share the findings from the research in each of the project countries with various stakeholders in the region, viz. the regional authorities, donors and other key stakeholders. This in turn would help develop a regional perspective on competition policy and law in eastern and southern Africa.
Further, the PCMU has also received a request from the Ethiopian competition authority (Trade Practice Investigation Commission) to organise a training workshops for its staff. The option for organising this training workshop on the days following the conference (i.e., on 29,30 March 2006) is being explored. It would be the first training workshop for the staff of the Ethiopian competition authority. More such training workshops are expected to be undertaken in the second phase (Stage II) of the project in each of the project countries for diverse stakeholder groups (viz. competition authority, media representatives, consumer leaders, academicians)
News from project countries………
The following table provides a glance at some important news from the project countries, pertaining and related to, competition and regulatory issues.
News from project countries………
COUNTRY
BOTSWANA
ETHIOPIA
MALAWI
MAURITIUS
MOZAMBIQUE
NAMIBIA
UGANDA
REGIONAL NEWS
NEWS
More of Liberalisation
The government intends to liberalise the information and communications technology and postal services sector to boost efficiency through competition, attract investment, and create more jobs. According to minister Pelonomi Venson, the Botswana Telecommunications Authority (BTA) has completed a study, which confirmed that the telecommunication market could accommodate further liberalisation in key areas such as international traffic and voice-over-Internet protocol.
Prioritising End-user Needs
The liberalisation of the telecommunication industry can lead to enhanced efficiency, innovation and responsiveness to end-user needs. In addition, the industry can provide citizens with a choice of high quality and affordable services, apart from attracting inward investment.
These were a few sentiments expressed by consultants engaged by Botswana Telecommunications Authority (BTA) in 2004, to explore strategies for further liberalisation of the said industry.
Ending BTC Dominance
The government has said that it will soon end the domination of the Botswana Telecommunications Corporation (BTC) domination in the telecommunication sector by opening it up to competition. The deputy permanent secretary in the Ministry of Communications, Science, and Technology has said that it was clear that Botswana wants greater access to communication technology, as it was vital for the development of their areas.
Negotiating for Investment
Ethiopia will negotiate for the early release of US$100mn Line of Credit (LoC) with India as part of its efforts to attract Indian investment in sugar, power and road sectors. Ethiopia’s Finance and Economic Development Minister met the Indian Finance Minister to push for the release of the LoC. 150 Indian companies have already set up manufacturing bases in Ethiopia. The timely release of the committed US$100mn LoC would help another 100 Indian corporates to set up units.
Price Hike Dents Profitability
The fuel price hike in the international market has affected the profitability of the Ethiopian Airlines. According to the company’s chief executive officer, the airline made only 72 percent of the profits anticipated, for the last six months, equivalent to 146 million birr – fallout of the price hike and the growing competition.
Resistant Against…
Some civil society organisations have vowed to fight against the sale of state-owned Malawi Telecommunications Limited (MTL). They have expressed disappointment over the Malawi government’s quick move to sale MTL without wide consultation.
Civil society organisations have decided to express their disappointment upon failure to convince the government to desist from rushing into such a venture. They are particularly not happy with the fact that the government intends to use proceeds from the sale for the construction of new parliament buildings, a move that they have described as ‘not pro-poor’.
Luring Investment into Aviation
The Malawian government is mulling over a plan to bring private investment into the country’s aviation sector, local newspaper Malawi Nation reported on its website. The paper reported that the government has engaged a consultant to conduct a study on how the private sector can participate in the country’s aviation sector, particularly airports.
On the other hand, the Privatisation Commission (PC) is working with the Ministry of Transport and Public Works in rationalising the sector, according to PC’s newsletter.
Do not Bow to the Bully: ICP
The government should not bow to the dictates of the International Monetary Fund (IMF) on the price of cooking gas. This is the stand of the Institute for Consumer Protection (ICP). According to the ICP, subjecting the price of cooking gas to the Automatic Pricing Mechanism (APM) would put consumers under insufferable pressure. ICPs support to the APM exercise to fix fuel prices was based on the assumption that this would provide for greater transparency in the price fixing mechanism and prevent political intervention in the establishment of the prices of these products.
“Don’t Buy Potatoes”
The ICP has called upon consumers to refuse to buy potatoes at the exorbitant price of Rs 12 per half kilo.
The body has deplored that competition on the potato market is not benefiting consumers. According to the consumer watchdog, market traders are getting more and more involved in collusive agreements knowing the indifferent attitude consumers tend to adopt after a price increase.
Consumers should make it known that they are not ready to concede to such an arbitrary price hike by refusing to buy potatoes, the ICP said.
An Arbiter for the Bread
The government, with the agreement of the Bakers Association, has assigned the Mauritius Audit Bureau to arbiter the price of bread. The decision came about when members of the Association had a meeting with the Prime Minister. Earlier, the government’s decision to raise the price of bread had created much confusion with some bakers providing bread and others not. The increase in the price of bread came at the same time as an increase in the price of flour and diesel.
Launch of ‘Buy Mozambican’ Campaign
The Minister of Trade and Industry has launched a new ‘Buy Mozambican’ campaign to counter the low consumption of local products. Difficulties in a precise identification of the ‘national products’ will also be addressed throughout the campaign.
Impeding factors of the country’s industry include difficulties in obtaining credit, a poor infrastructure, and erratic electricity supply.
Enhancing Trade Flow
Local entrepreneurs should take advantage of the bilateral trade agreement between Mozambique and Malawi signed on December 28, 2005 to boost their exports according to the Malawi Confederation of Commerce and Industry (MCCCI). The agreement allows select Malawian products to be sold in Mozambique under free duty status and binds the Malawian authorities to accord the same status to Mozambican goods. The Ministry of Trade and Private Sector Development has said that current trade flows between the two countries are in Malawi’s favour.
In the Pipeline!
Potential investors are wrapping up a prefeasibility study into a proposed R 1.5 billion (US$250mn) petroleum pipeline between Maputo and Witbank that could be the first privately owned pipeline for liquid fuels in South Africa.
It was expected that the study would be finalised within the next four weeks, according to NGO Women In Oil and Energy SA’s (WOESA) investment arm, Woesa Investments – one of the proposed investors in the pipeline. Woesa’s lead shareholder is Petromoc, the Mozambican government’s petroleum company.
A Full Stop
Several businesses in the North were unable to operate on January 3, 2006, the first working day of the year, and hundreds of commuters and car owners were left stranded as the fuel crisis worsened. However, representatives of petrol companies in Windhoek downplayed the crisis and blamed the shortages on distribution and other logistical problems.
They said that recent shortages of the precious liquid being experienced in the Northern areas (which includes Oshakati, Ongwediva and Tsumebe) were mainly due to distribution problems, which were caused by the latest supply of fuel.
Investment Grade Rating
Fitch Ratings has given Namibia a credit rating of BBB. This means that, after South Africa and Botswana, Namibia is the third country in sub-Saharan Africa to be given an investment grade rating. Namibia’s economy is closely tied to South Africa’s and the Namibian dollar is fixed at a one-for-one exchange rate to the rand. Ritva Reinikka, the World Bank’s (WB) country director for the five Southern African Customs Union members, said South Africa’s solid performance is spilling over into the rest of Africa.
Competing for Mining Capital
Mineral rich countries in southern Africa are vying for international exploration dollars against older mining regions, which are struggling to maintain their share of exploration capital.
A recently released report entitled ‘South Africa’s Mineral Industry – 2004/5 Yearbook’ noted that South Africa is losing the competition for exploration dollars. The document, compiled by the Mineral Economics directorate, stated that there is still space for exploration in South Africa, according to a report by the Mining Weekly on January 24, 2006.
For Putting a Stop to Procurement Flaws
A local procurement institution will be set up that will put an end to misuse of public funds and flaw of regulations and procedures, during procurement. The Public Procurement and Asset Disposal Authority (PPDA) and other stakeholders have reached the final stages of drafting the bill that will pave way for the establishment of an institution called The Uganda Institute of Procurement and Supply Chain Management.
Possible Benefits of Eco-tourism
Uganda’s tourism industry could benefit from a new holidaying trend called Eco-tourism. This type of tourism is cheap and easy to implement because the flora, fauna and cultural heritage are the primary attractions, rather than theme parks or buildings.
Uganda’s climate and green landscape as well as its rich culture and bird and animal life could make it an eco-tourism hotspot.
According to the World Tourism Organisation 2005 report, eco-tourism is the fastest growing market in the tourism industry with an annual growth rate of five percent worldwide.
A Bumper Harvest of Matooke, but…
There has been a significant increase in the supply of Matooke, a popular cooking banana that is Uganda’s staple food, which has resulted in low prices. A sack of approximately 130 kgs is selling at Shs 20,000, which two weeks ago sold at Shs 35,000. Bunches are selling at an average of Shs 4,000-6,000. In spite of this, the demand for Matooke has remained low.
Other fresh commodities like sweet potatoes, cassava fresh and Irish potatoes have increased in prices.
Skewed Sugar Policies Leave Sour Aftertaste
The European Commission had announced the dismantling of the sugar regime last year in accordance with the rules of the World Trade Organisation (WTO). This will have all kinds of repercussions on the market and on those who earlier had an advantage. However, the time for change has come.
The subsidies the EU guarantees its members help them produce sugar at a very cheap price. For former colonies, like Mauritius, in the African Caribbean Pacific (ACP) group, there was the advantage of a special quota system and accordingly sugar became the engine that drove the Mauritian economy ahead. But the market was distorted in that beet sugar is more than twice the price of cane sugar in production, but it was sold at a low price on the world market, which made sugar from cane processors uncompetitive.
Obliterating Non-tariff Barriers
Elimination of non-tariff barriers (NTBs) among member states of the East African Customs Union (EACU), for intra-EAC trade, can lead to a success for the Union. The statement is an issuance from a study entitled ‘EAC Customs Union Tariff Liberalisation in Perspective’. As per the report, a survey carried out among companies trading in eastern and southern Africa confirmed that NTBs do more to hamper cross-border trade in sub-Saharan Africa than tariffs. The conclusion of the report is that an elimination of the same is more urgent than tariff liberalisation.
Condemning Unfair Trade Practices
A meeting of African non-governmental organisations (NGOs) in Bamako, Mali under the platform of the World Social Forum has unanimously condemned unfair trade policies between Africa and Europe. They also noted that the policies of the Bretton Woods Institutions, the IMF, and the WB have continued to impoverish Africa.
The unanimous view of the continent came to light at the formal opening of the Forum at the Modibo Keita stadium in Bamako where thousands gathered to demonstrate against unfair trade policies.