Strengthening Constituencies for Effective
Competition Regimes in Select West African
Countries
Highlights of Preliminary Country Paper: The Gambia
Presented by: Omar Ousman Jobe
7UP4 Project Launch Meeting
Accra 19th-20th June 2008
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Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
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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
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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.
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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
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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
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Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
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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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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
The Commonwealth Secretariat is currently helping in the setting
up of the Competition Commission
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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 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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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
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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 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.
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Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
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Tel: (220) 494338 Fax: (220) 494219
IV. Sectoral Policies
The National Water and Electricity Company (NAWEC) enjoys a
monopoly in the generation of electricity
But this is being relaxed with the introduction of an Independent
Power Producer with an installed capacity of 25 megawatts.
The provision of potable water services rest entirely with NAWEC
The emergence of a third GSM operator: Comium led to
interconnection issues among telecom operators that warranted the
interventions of PURA Since May 2007 all telecommunication
service providers – GAMTEL, GAMCEL, AFRICELL and
COMIUM were obliged to sign interconnection agreements with
each other,
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Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
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Tel: (220) 494338 Fax: (220) 494219
Promoting a Healthy Competition Culture:
The telecommunication sector: the emergence of Africel and
later Comium brought to an end the monopoly enjoyed by
Gamtel, the national operator (misused its market power,
charging excessive prices, etc)
Benefits to consumers: slashing of product cost, elimination of
validity, better services, lower rates etc.
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V. Anti-Competitive Practices in
The Gambian Economy
Direct Government policies
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Direct Government Policies
Lack of clear policies to curb the desire by private sector
operators to maximize profit at the expense of the state and
other competitors.
Certain policy issues such as the granting of tax holidays and
development certificates to institutions within an economy
could lead to anti-competition (e.g.. TAF construction was
given a development certificate by The Gambia government)
The refusal by DOSCIT to grant licenses to interested parties to
have their own TV stations is anti-competitive.
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Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
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Tel: (220) 494338 Fax: (220) 494219
Direct Government Policies:
The non- existence of a Telecoms bill in the industry has given
rise to anti-competitive tendencies in the Gambian economy.
The divesture program of Government of key institutions was
carried out without going through an international bidding
process. This could have led to “arrange buying” with a view to
dominating the market.
The existence of government monopolies (like NAWEC) which
are poorly run are by anti-competitive. In the absence of
alternatives, the consumers may not be getting the best value
for their money
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Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
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Tel: (220) 494338 Fax: (220) 494219
Vi. Anti-Competition Issues in
The Gambian Economy
Interplay of Operators Within The
Gambian Economy
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Interplay of Operators Within The Gambian Economy
Instances of market failures in The Gambia include: the
development of cartels. Collusive horizontal agreements involving
collusion between businesses operating in the same market and
hence normally competitors)
Example: In the commodity sectors of Rice, Onion, Irish potatoes
and Flour in The Gambia, there exists a strong collusive agreement
in the selling price. The main importers concur to fix prices, thus
leading to the hike in retail price in the shops.
Examples: Vertical agreements between importers and distributors
- The consumers goods sector like Rice, Cooking Oil and Sugar
The rigging of Bids is a reality in both State and non-state actor
spheres.
Procurement Procedures are not always followed due to vested
interest!
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Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
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Tel: (220) 494338 Fax: (220) 494219
Examples of anti-competitive practices
Private doctors having their own clinics and
prescribing medicines which patients may not need and
which they must sell or loose money
Schools urging students to buy uniforms and other
products from them at a price that may be above that of
the market is not competitive.
A telephone operator: Comium – making its telephone
handset incompatible with SIM cards issued by other
operators
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Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
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Tel: (220) 494338 Fax: (220) 494219
Cont’d:
The rice and cement market are extremely
concentrated in the hands of a few, making it
practically impossible for a new entrants to penetrate
these markets.
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Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
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Tel: (220) 494338 Fax: (220) 494219
Cont’d:
Monoploy in the energy sector gives the consumer no
room for an alternative. Consumers have to put up
with whatever conditions laid down by NAWEC.
Tied-selling: A wholesaler interested in Sugar has to
buy sugar on credit from the importer then he has to
buy rice in order for the importer to continue trading
with him on credit in sugar.
The same system is replicated between the
wholesalers and the retailers
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Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
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Tel: (220) 494338 Fax: (220) 494219
Cont’d:
Political and commercial interests are inextricably
linked, making the promotion of public interest rather
difficult
Vested interest, corruption and political patronage often
override the protection of public interest
It is therefore the responsibility of The Gambia
government and regulatory agencies like PURA and the
would-be Competition Commission to protect the
consumers, particularly the poor
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Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
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Tel: (220) 494338 Fax: (220) 494219
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 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 telecommunication and the water sectors.
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Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
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Tel: (220) 494338 Fax: (220) 494219
Challenges (Cont’d)
The lack of sector specific (telecommunications and
the water) laws continues to inhibit our regulatory
effectiveness in those sectors.
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.
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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.
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The Way Forward:
The setting up of the Competition Commission
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
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 intends to develop 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.
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Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
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Tel: (220) 494338 Fax: (220) 494219
THANK YOU
FOR YOUR
ATTENTION ! !
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Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia.
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Tel: (220) 494338 Fax: (220) 494219