Priority Issues and Challenges for
Competition Reforms in 7 UP 4 Countries
Lahcen ACHY
Carnegie Middle East Center Beirut
Research Adviser for 7UP4
Outline

Profile of the 7UP4 countries

Two key lessons

Three Priorities

Three Challenges
Profile of the 7UP4 countries
◦ Economic Background
 High reliance on agriculture particularly for jobs
 Large share of informal urban sector
 Low income countries
 High reliance of ODA (except Nigeria)
Profile of the 7UP4 countries (2)
◦ Recent historical background
 Central planning and State-led growth after independence
 High debt and macro economic mismanagement in the 80s
 Structural adjustment programs in the 80s and 90s
 Poverty reduction strategy and SGR in last decade
Profile of the 7UP4 countries (3)
◦ Legal and regulatory
 Burkina, Senegal and Mali competition laws adopted since mid
nineties. Togo since 1999. The Gambia more recently
 Nigeria and Ghana: draft laws exit but not yet adopted
 Apart from Nigeria, there is no specific law on consumer
protection in the six other countries.
 But many pieces of legislation on consumer protection exist.
Competition authority is empowered to protect consumer
interests to some extent (Burkina, Senegal, Togo).
 All 7UP4 countries are members of WTO and ECOWAS
 Four of them are members of WAEMU (B,M,S,T)
Key lessons
1. Pro-competition policies adopted in 7UP4
countries as part of their structural
adjustment programs had adverse effects on
consumers and domestic small businesses
Broad lessons (2)

Case of Agriculture Policy
◦ Removal of subsidies and guaranteed prices
◦ Privatization and attraction of foreign investors
◦ No input subsidies: lower use of selected seeds and fertilizers
decline of productivity Lower production for small farmers
◦ No State guaranteed prices for output small farmers targeted
by large traders lower prices Lower revenues for farmers
◦ Openness to food imports had negative impact: on local
production: Agriculture special case by competition policy in
developed countries (US, EU): exemptions and subsidies
Broad lessons (3)

Case of Investment Policy
◦ Removal of restrictions on foreign ownership
◦ But FDI not up to expectations:
 In terms of their amount
 In terms of orientation : rent seeking with no spillover on the rest of the
economy
 In terms of contractual provisions
 FDI because of size of projects has access to incentives (fiscal rebates,
cheaper land) that don’t benefit other investors
 large multinationals dominate market and crowd out domestic firms of
smaller size and modest technology
◦ In most countries, industrial sector declined since the 80s
Broad lessons (4)

Case of Privatization Policy
◦ Privatizations and disengagement of the State in heavily indebted
public enterprises
◦ In some cases, public monopolies were privatized as
contracts of exclusivity, providing monopoly powers to the
private sector with serious competition concerns
◦ Privatization of basic services (water, electricity) without
provision of a minimum universal service for the poor had its
social cost.
Broad lessons (2)
2. Complex overlapping regulations
 Inconsistent with economic structure
 Poor enforcement even when regulations exist
 In Burkina, Senegal and Mali competition adopted since mid nineties. In
Togo since 1999.
 Political economy of Interference and diluted responsibilities
 Cartels and abuses of dominance are dealt with at the level of WAEMU
(Precedence on national law)
 ECOWAS Treaty (1975) does not make clear reference to competition.
But competition regulations are embodied in two Supplementary Acts
adopted in Abuja in 2008
Priorities

In terms of approach
1. Streamline and rationalize regulations (RQ)
 Content
 Institutional architecture and sharing of responsibilities
 Avoid conflicts of jurisdictions
 Grant more responsibilities to national authorities in sanctioning anticompetitive practices.
2. Focus on most abusive practices to consumers and
business
Regulatory Quality
55
41
43
44
Burkina Faso
Senegal
36
30
16
Togo
Nigeria
Gambia
Mali
Ghana
Priorities

In terms of sectors
3. Focus on sectors that would make a substantial
difference for the poor
◦ Agriculture
◦ Basic services (social and backbone services for business)
 Water
 Electricity
 Telecommunications
◦ Public procurement s
 Size: largest buyer
 Allocation: use public money
 Equity: services key to the poor: education, health and infrastructure
Challenges
1. Strengthen State Capacity
◦ Market economy needs strong and effective state
 Rule of law: contract enforcement
 Effectiveness: capacity to negotiate and to manage
 In both cases need for more resources (human and financial)
Governance Indicators in 7UP4 countries
45.9
42.1
43.1
11.5
13.3
Nigeria
23.4
21.8
28.4
52.2
48.3
51.2
52.1
Senegal
Ghana
23.2
3.8
Togo
Mali
Burkina Faso
Government Effectiveness
Gambia
Rule of Law
Challenges (2)
2. Strengthen the advocacy role of CSOs
◦ Provide more space to consumers’ associations
 Politically: voice and accountability
 Legally: recognition of CSOs and their role
◦ Build their capacity and support them play effectively their role
(raising awareness and advocacy)
Ignorance rate of Competition law
% who don't know or gave the wrong aswer
70
66
51
51
Burkina Faso
Togo
53
44
37
Ghana
Senegal
Mali
Gambia
Nigeria
Discrepancy between prevalence and media report
Prevalence of anti competitive practices
Frequency in the media (often+sometimes)
79
72
67
49
41
40
34
22
31
25
19
10
10
5
Burkina Faso
Gambia
Ghana
Mali
Nigeria
Senegal
Togo
Challenges (3)
3. Advocacy for better international governance
 Domestic solutions are only part of the solution
 Negative effects of absence or lack of competition
in poor countries is largely due to
 Impact of powerful multinationals
 Impact of state subsidies in developed countries
Thank you for your attention
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