Strengthening Constituencies for Effective
Competition Regimes in Select West African
Countries
Country Research Report: The Gambia
Presented by: Omar Ousman Jobe
7UP4 Project Mid Term Review Meeting
Banjul 29th-30th July 2009
1
Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
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Tel: (220) 494338 Fax: (220) 494219
General Country Background:
The Gambia: one of the Least Developed Countries
Ranked 155 out of 177 countries according to the UNDP Human
Development Index (2006).
Small Population (about 1.5 million) with a predominantly agricultural
economy with little potential for value addition – The country is still a
groundnut garden
An industrial sector that is struggling to emerge due to numerous
structural and financial constraints and a vibrant service sector.
Small domestic market size – role of the re-export trade (Strategic
positioning: disparities in currencies, tax regimes etc)
The country’s economy is largely tax-based (around 85% of GLF)
58% of the population are considered poor (PRSP)
Reached HIPC completion point in January 2008 and is now eligible for
debt relief
2
Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
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Tel: (220) 494338 Fax: (220) 494219
General Country Background (Cont’d):
The Gambia is in the middle ranking of the widely used indicators of
business climate and competitiveness.
In the 2007 World Bank Doing Business Indicators, The Gambia is
ranked 113th out of 175th countries, performing better than most of its
West African neighbors, (except Ghana and Nigeria), in terms of ease
of dealing with licenses and permits, and for enforcing contracts and
on labor regulations.
3
Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
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Tel: (220) 494338 Fax: (220) 494219
Social & Economic Policies affecting Competition
The structural adjustment programmes of the 1990s paved the
way for the liberalization of the economy and the Gambia
government is committed to free market policies and a vibrant
private sector-led growth (Vision 2020 blueprint)
• Second Poverty Reduction and Strategy Paper (PRSP II)
covering an implementation period of 5 years (2007 – 2011),
outlines The Gambia’s overall policy framework for Growth and
Poverty Reduction. This second PRSP focuses on the needs to
eradicate poverty in The Gambia and serves as main reference
for policy and programme designers in public and private sector
and development partners
4
Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
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Tel: (220) 494338 Fax: (220) 494219
Social and Economic Policies Affecting Competition (cont’d):
The Gambia’s choice of economic ideology is based on free
market principles.
The Gambia has various laws governing trade and customs
regulation: The Gambia Free Zone act (2001); The Gambia
Investment Promotion act (2001);
The launching of the Gambia Gateway Project funded by the
World Bank (2002)
The government set up The Gambia Investment Promotion and
Free Zones Agency (GIPFZA), whose primary task is to
establish and manage Free Economic Zones (FEZs)
GIPFZA is a one-stop-shop for investment
5
Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
*
Tel: (220) 494338 Fax: (220) 494219
Background (Cont’d):
Other laws affecting business and investment are the Companies Act of
1955 and the Business Registration Act of 2005.
The judicial system upholds the sanctity of contracts
Market forces determine exchange rates
There are no restrictions on the transfer of funds by investors into and
out of The Gambia. The Gambia Investment Promotion Act of 2001
provides the legal ground for transfer of funds.
Protection of intellectual property rights is guaranteed; A Government
procurement Act is also in place.
There are no limits on foreign ownership or control of businesses except
in the television broadcasting and defense industries which are closed to
private sector participation.
There are no laws or regulations that limit or prohibit foreign
investment, participation or control.
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Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
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Tel: (220) 494338 Fax: (220) 494219
Measures already taken:
Reducing the extent of state ownership of public enterprises
Elimination of price controls
The adoption of a divestiture policy
The establishment of a Divestiture Agency
The creation of a system of licensing the public utilities (with
the expectation of greater private sector involvement)
Trade liberalization programmes
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Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
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Tel: (220) 494338 Fax: (220) 494219
Regulatory Mechanisms:
The Central Bank of The Gambia
The Gambia Divestiture Agency (2001) – set up to carry
out the government's divestiture program in several
sectors such as energy, communication, transportation,
agriculture, pension funds, and housing finance
The Public Utilities Regulatory Authority (2004) set up
to regulate the activities of providers of certain public
utilities such as electricity, water and sewage services,
petroleum and gas, telecommunications, broadcasting,
and postal services
Gambia Civil Aviation Authority
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Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
*
Tel: (220) 494338 Fax: (220) 494219
The Competition Act
The Competition Act of 2007 was assented to by the President
on the 5th day of October and gazetted the 19th October, 2007.
The Overall Objective of the act is to foster a viable
competition culture that favours investment, fair trade, growth
and poverty reduction.
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Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
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Tel: (220) 494338 Fax: (220) 494219
The Specific Objectives of the act:
To promote competition in the supply of goods and services by among
other things: Prohibiting collusive agreements and bid rigging; Providing
for investigation and control of other types of restrictive agreements.
To promote and protect the free functioning of the markets that are open
to competition, including the markets previously subjected to restraints
imposed by government.
To give confidence to those wishing to invest in the Gambia
To demonstrates the government’s commitment to a free-market
economy
To guard against the risk that enterprises with dominant market power
will choose to erect private barriers to competition and exploit customers
10
Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
*
Tel: (220) 494338 Fax: (220) 494219
The Regulatory Authority:
• The Public Utilities Regulatory Authority (PURA) was
established by Government (in 2004) to provide the legal
framework to regulate the activities of providers of public
utility services.
• PURA now concentrates on the Telecommunications,
Electricity and Water utility sectors.
11
Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
*
Tel: (220) 494338 Fax: (220) 494219
Methodology:
• Perception Survey: A sample size of 150 respondents
was considered suitable to capture the perception of
competition in The Gambia
• Purposive Sampling Techniques
• The Criteria of Classification therefore give us three
groups, namely, (a) Private business, (b) Government,
and (c) Civil Society.
• 5 Sector Regulators were interviewed: PURA, CBG,
GPPA, Civil Aviation
• A sample of 12 farmers was also randomly selected
from households close to the residence of the
enumerators
• Plus 5 seed firms and 3 fertilizer firms
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Methodology:
• The seed and fertilizer firms are few in
number, hence, the known ones were listed
and subsequently covered during the
interview. Five seed firms and 3 fertilizer
firms were interviewed.
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Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
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Tel: (220) 494338 Fax: (220) 494219
Limitation of the Survey
• Enumerators were trained to complete the
questionnaires through personal interviews using
structured questionnaires
• institutions insisted that the enumerator should leave
the questionnaire with them
• private sector institutions, particularly banks, were
reluctant to participate in the survey
The survey did not cover the whole country due to
limited resources and was therefore restricted to the
Greater Banjul Area: Banjul City Council, Kanifing
Municipality and Brikama Area Council.
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Research Findings: Awareness Issues
• The survey revealed that the majority of the respondents
(about 41% of them) have no idea about the existence of
a competition laws in the Gambia.
• 77.8% of the respondents from the government maintain
that there are competition laws in the Gambia.
• 42.7% of the total respondents said that they do not
know whether there is a consumer protection law in The
Gambia.
• 52.7% of the respondents reported that they know of an
agency that protects consumer’s interests in The
Gambia
15
Research Findings: Awareness Issues
• 70% of the respondents believe that competition issues
are not understood in The Gambia because of lack of
publicity about competition issues.
• Civil Society actors are less nuanced in their
appreciation of the situation. For them, there is
absolutely no competition in the power sector, being a
natural monopoly, the recent emergence of Independent
Power Plants notwithstanding.
• All the groups reported that the level of competition in
the retail consumer goods sector is high (55.4% of the
respondents
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Research Findings: Awareness Issues
• The level of competition within the
transport sector is generally perceived to be
high by 42.7% of the respondents).
17
Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
*
Tel: (220) 494338 Fax: (220) 494219
Perception of the Prevalence of
Anticompetitive Practices
• Anticompetitive practices are quite frequent.
• That is the view of 44.8% of the respondents,
attributing it to the following factors in
descending order of prevalence: price fixing,
market sharing and price.
18
Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
*
Tel: (220) 494338 Fax: (220) 494219
Perception on level of Competition
• Overall, the level of competition in the country is
described as moderate by 44.7% of the respondents
• private business group (63.3%) and civil society group
(54.9%) believe that the level is high, whereas, those
from the government 44.4 % describe the level as
moderate.
• About 59% of the respondents asserted that the level of
competition in the telecommunication sector is high
• The respondents unanimously agree that the level of
competition in the power sector is low (34.9% of the
respondents),
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Perception on Enforcement
• Most respondents (49.1%) asserted that
actions are sometimes taken when
competition laws are violated.
• Very few (7.5% of them) reported that no
action is taken when competition rules are
violated and apportion blame for this
inaction on the lack of enforcement of the
relevant laws.
20
Perception of the role of media
• the media’s understanding of competition
issues is very limited and this renders them
ineffective in disseminating competition
related information and issues. That is the
view of 63% of the respondents
21
Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
*
Tel: (220) 494338 Fax: (220) 494219
Independence of Regulatory Authorities
• The 4 Regulatory Authorities that were enumerated:
PURA, Central Bank, Public Procurement Authority
and GCAA are categorical
• Totally Independent
• Their senior staff are autonomous in terms of
decision making
• Though appointed, they cannot be easily dismissed
• All say they enjoy a good degree of budget
autonomy except GPPA
• Only PURA admitted that there are possible political
interferences on award of licenses, since they only
have an advisory role
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The State Monopolies
• Water
• Electricity: Expensive because of type of
generation Plants in use
• Television Services
• Defense related industries
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Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
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Tel: (220) 494338 Fax: (220) 494219
The Agriculture Sector
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Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
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Tel: (220) 494338 Fax: (220) 494219
Agricultural Production:
• Cash Crops: Groundnuts, Cotton; Sesame
• Food Crops: Millet, Maize, Sorghum, Rice,
Horticulture, Cassava, Sweet Potato
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Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
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Tel: (220) 494338 Fax: (220) 494219
19
92
19 /9 3
93
19 /9 4
94
19 /9 5
95
19 /9 6
96
19 /9 7
97
19 /9 8
98
19 /9 9
99
20 /0 0
00
20 /0 1
01
20 /0 2
02
20 /0 3
03
20 /0 4
04
20 /0 5
05
/
20 0 6
06
20 /7
07
/8
Production (MT)
Production of major crops (000MT) 1992/93-2007/08
160
140
120
100
80
60
40
20
0
Groundnuts
Early
Late
Maize
Sorghum
Paddy
Year
26
COMPARISON OF TRENDS IN PRODUCTION AVAILABILITY AND CONSUMPTION (1986 - 2005)
450
000 METRIC TONS
400
350
300
250
200
150
100
50
0
1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005
Net production
78.8 79.6 100.2 78.9
70.1 86.9 97.3 81.8
Total Availability
142.4 137.7 143.7 146.7 163 168.5 170.6 182.4 171.7 181.8 188.3 202.8 214.2 271.9 283.7 308.1 306.5 365.9 374.8 422.3
Total Cereal Consumption 135.5 141.1 146.8 152.9 159.2 165.6 172.5 179.6
72.7 80.7 89.6 94.8 90.46 121.4 148.3 168.3 115.8 172.4 183.3 166.1
187 194.6 205.5 214.2 233.7 234.6 252.5 254 255.5 245.4 252.2 258.6
YEARS
27
Potential Yld (Kg/ha)
ille
t
L.
M
ille
t
So
rg
hu
m
M
Up aize
lan
d
ric
Sw
e
am
p
ric
e
G.
nu
t
Actual Yld (Kg/ha)
E.
M
Yield (kg/ha)
4500
4000
3500
3000
2500
2000
1500
1000
500
0
Crop
28
Seed Cotton Commercial Production: 1992/3 to 2005/6
3,500
3,000
2,000
1,500
1,000
500
01
/0
00 02
2/
00
00 3
3/
0
00 04
4/
0
00 05
5/
00
6
01
00
/
00
99
/
99
98
/
98
97
/
97
96
/
96
95
/
95
94
/
94
93
/
93
0
92
/
Mt.
2,500
Years
29
80%
70%
60%
50%
40%
Exports
30%
20%
Imports
10%
0%
66 968 970 972 974 976 978 980 982 984 986 988 990 992 994 996 998 000 002 004
9
1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 1 2 2 2
30
Competition issues in the Agriculture Sector
• The most common anti-competitive practices
encountered at the stage of buying by 33.3% of the
farmers are (in order of prevalence): collective price
fixing, market sharing, and bid rigging.
• The group which is mostly engaged in anticompetitive
practices in the seed production and supply market is
farmers as reported by 60% of the seed firms.
• anticompetitive practices are mostly encountered in the
seed production/supply market are: production, selling
to retailers, and selling to farmers. This view is
maintained by 40 % of the seed firms
31
Competition issues in the Agriculture Sector
• The impact of anticompetitive practices on the
farms is felt in both the output and quality of
farm produce.
• Increased prices of crops, as an impact of
anticompetitive practices, was reported by 20%
of the seed firms.
• Anticompetitive practices, in particular, price
fixing, have been reported in the production and
supply of fertilizers in The Gambia.
32
Perception on Prevalence of Anticompetitive
Practices
• Anticompetitive practices are quite frequent. That
is the view of 44.8% of the respondents,
attributing it to the following factors in
descending order of prevalence:
• Price fixing
• Market sharing
• and Price
33
Challenges:
Lack of expertise in competition administration
Weak institutional environment that hinder the implementation of
a regulatory regime;
Capacity building and human resource development is necessary to
ensure that regulatory agencies can fulfill their mandate effectively
Need for a regional approach involving R.E.Cs and the
development of regional standards
Absence of Strong Consumer Awareness and Consumer Groups to
contribute to the regulatory process and the presence of
stakeholders who are ill-prepared to accept the rules of
engagement.
Insufficient funding for regulatory activities and the lack of sector
specific laws for the water sectors.
34
Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
*
Tel: (220) 494338 Fax: (220) 494219
Challenges (Cont’d)
• The lack of sector specific (water) laws continues to
inhibit our regulatory effectiveness in the sector.
• These legislations are required to supplement the
PURA Act by giving it the specific mandate within the
sectors and delineate the complementary policy and
regulatory roles and responsibilities of all stakeholders.
• Donors such as the World Bank are not keen to commit
funds to a sector that does not have any legal
framework.
• There are potential conflicts between the Competition
Commission and the other regulators like PURA
35
Challenges (Cont’d)
• Sector regulators like PURA and officers of the emerging
Competition Commission need to be shielded from undue
interference by policymakers, lobby groups, political
clients and other actors driven by their vested interest.
• Absence of regulatory enforcement instruments
36
Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
*
Tel: (220) 494338 Fax: (220) 494219
The Way Forward:
•
•
•
•
The strengthening of the Competition Commission
Total Financial Independence
Finalization of the Competition Policy
Building capacity of National Stakeholders (With
Technical Assistance from CUTS International)
• That strengthening of regulatory institutions: The
Divestiture agency, The Central Bank and the
Public Utilities Regulatory Authority (PURA), the
Competition Commission etc
37
Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
*
Tel: (220) 494338 Fax: (220) 494219
The Way Forward:
• The promotion of a strong political will to foster a
healthy Competition Culture
• The development of a Consumer Policy
• Constructive competition and consumer advocacy
engagements with State and non-State actors
• PURA is developing consumer codes, which will
establish minimum acceptable standards of service
provision. These are geared towards ensuring that
consumers get the services they are paying for.
38
Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
*
Tel: (220) 494338 Fax: (220) 494219
THANK YOU
FOR YOUR
ATTENTION ! !
39
Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
*
Tel: (220) 494338 Fax: (220) 494219