Strengthening Constituencies for Effective
Competition Regimes in Select West African
Countries
(CUTS 7Up4 Project)
PROJECT LAUNCH MEETING
19-20 June, La Palm Royal Beach Hotel, Accra, Ghana
Draft Preliminary Country Paper (PCP)
COMPETITION REGIME SCENARIO IN NIGERIA
Presented by
ADEDEJI, Babatunde Abiodun CStat.
Coordinator-General / Founder
Consumers Empowerment Organisation of Nigeria – CEON
(Formerly, Consumer Affairs Movement of Nigeria – CAMON)
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Outline of the Presentation
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General Background
Nigeria Profile
Social and Economic Policies affecting competition in
Nigeria:
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Development Policy
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Agriculture Development Policy
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Industrial Policy
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Privatisation and Regulatory Reforms
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Investment Policy
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Government Procurement Policy
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Consumer Protection Policy
Sectoral Policies
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Power
Water
Telecom
Transport
Financial Services
Health Services
Anticompetitive Practices
Conclusions
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I. General Background
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Geographical Location: Nigeria is situated in the West African
region and lies between longitudes 3 degrees and 14 degrees and
latitudes 4 degrees and 140 degrees. It has a land mass of 923,768
sq.km.. It is bordered to the north by the Republics of Niger and
Chad. It shares borders to the west with the Republic of Benin, while
the Republic of Cameroun shares the eastern borders right down to
the shores of the Atlantic Ocean which forms the southern limits of
Nigerian Territory. The about 800km of coastline confers on the
country the potentials of a maritime power. Land is in abundance in
Nigeria for agricultural, industrial and commercial activities.
Government: Three-tier structure - A Federal Government, 36 State
Governments, 774 Local Government Administrations
Population: 144.7million (year 2006 census)
Official Language: English
Main Indigenous Languages: Hausa, Igbo, Yoruba
Over 200 ethnic nationalities
Main Religions: Christianity, Islam, Traditional
Main Commercial/Industrial Cities: Lagos, Onitsha, Kano, Ibadan,
Port Harcourt, Aba, Maiduguri, Jos, Kaduna, Warri, Benin,Nnewi
One of the largest producers of crude oil in the world and Second
Largest market in sub-Sahara Africa
It also has enormous natural gas reserves, vast agricultural lands,
natural resources and a dynamic private sector
Very big telecoms market – GSM subscribers` base rising from
40,000 in 2001 to 46.2 million in 2007
Economy fast growing and promising
Democratic Government
Peaceful and healthy environment for Investors.
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Profile
PROFILE
Population:
144.7 million ****
GDP (Current US$): 103.3 billion****
Per Capita Income:
640.0 (Atlas method)****
(Current US$)
1,128 (at PPP.)***
Surface Area:
923.8 thousand sq. km
Life Expectancy:
46.5 years***
69.1 (of ages 15 and above)***
Literacy (%):
HDI Rank:
158***
Sources:
- World Development Indicators Database, World Bank, 2006
- Human Development Report Statistics, UNDP, 2005
(***) For the year 2005
(****) For the year 2006
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II. Social and Economic Policies affecting
Competition in Nigeria
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Development Policy (NEEDS)
The National Economic Empowerment and Development Strategy
(NEEDS) 2004 – 2007 is Nigeria’s reform based medium-term plan for
economic recovery, growth and development.
NEEDS was conceptualized in 2003 and launched in 2004, as a
response to the numerous challenges facing the nation. Some of the
challenges include the following:
Near collapse of social and economic infrastructure;
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Per capita GDP remained stagnant prior 1990; Grew at 2.2% 1999 –
2003
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Total GDP 2001 $45 billion;
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Per capital income was $300 a year;
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External and domestic debt – 70% of GDP (difficult to service debt,
domestic debt rose by 200% between 1999 and 2002 – about
$9.0billion);
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Real sector dominated by primary production sectors: agriculture
41%, crude oil 13%, manufacturing 5 – 7 % of GDP;
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High macroeconomic volatility (exchange rate, inflation rate, budget
deficit, GDP growth rate, GDP per capita - among the worst in the
world);
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Finances at all levels of government in poor shape (pension crisis,
arrears of salaries, huge debt misallocation and mismanagement);
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Nigerian urbanization rate – 5.3% (one of the fastest in the world);
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High level of poverty (about 70%);
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Dysfunctional education system (low standard, institutions decay,
youth militancy etc);
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Unfriendly business environment (public sector dominance, rent
seeking, weak institutions, corruption, high cost of doing business);
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High unemployment rate (urban 12.4%, rural 23.2%);
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General insecurity of life and property.
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Development Policy - Continues
The conceptual issues on NEEDS/SEEDS are based on four goals:
• Poverty reduction,
• Wealth creation,
• Employment generation,
• Value re-orientation.
The framework for actualizing the goals of NEEDS is anchored on three
pillars;
• Empowering people and improving social delivery,
• Fostering private sector led growth through creating the appropriate
enabling environment, and
• Enhancing the efficiency and effectiveness of government, by changing
the way government does its work.
The SOCIAL CHARTER under NEEDS covers the following key areas
• Economic empowerment and poverty Reduction;
• Education;
• Health;
• Employment generation;
• Gender equity;
• Water and sanitation;
Poverty Reduction and Employment Generation: Broad targets
• Increase average per capita consumption by at least 2.0% a year;
• Creation of about 7 million jobs by 2007;
• Increase immunization coverage to 60 percent by 2007;
• Increasing the percentage of the population with access to safe drinking water to at
least 70 percent by 2007;
• Significantly increasing school enrolment rates particularly girls;
• Increasing the adult literacy rate to at least 65 percent by 2007.
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Agriculture Development Policy
Nigeria's agricultural policy aims to:
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ensure food security,
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promote domestic trade,
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enhance foreign exchange earnings,
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promote export diversification,
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enhance access to agricultural raw materials,
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encourage participation in preferential trade arrangements, and
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promote the use of modern technology and the quality of agricultural exports.
Following are some of the Federal Government of Nigeria Policies on
Agriculture Development:
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The Presidential initiatives on rice, cassava, vegetable oil, tree crop,
livestock, fisheries, aquaculture development, and rubber.
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A Programme for raising maize production from 7m metric tones to
14m metric tones, by the end of 2007, and tropical fruit production
were put in place between 2004 and 2005.
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Implementation of the National Special Programme for Food Security.
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Donor assisted projects (Roots and Tubers expansion Project
(RTP), the Community-based Agriculture Development Project, and
National Fadama I and II Project.
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Easier assess to Agricultural Credit Programme (Trust Fund Model
TFM).
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Promotion of Export Support initiatives (tariff measures and export
support schemes for farmers and agric-businesses).
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Value Added Tax exemption for locally produced agricultural input
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deregulated fertilizer market by allowing the private sector to participate in the
supply of fertilizers
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The Government established a National Strategic Food Reserve Programme, to
act as a buyer of last resort with the purpose of maintaining food security as well
as price stabilization
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Major Agricultural Imports, Exports and Contribution
to Economic Activity
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Agricultural output consists mainly of: food crops, such
as cassava, yams, sorghum, millet, maize, groundnuts,
palm fruit; cash crops, such as palm oil, rubber, cocoa,
cotton, gum arabic, and shea butter; poultry, goats, lamb,
pigs, and cows; fishery products; and forestry products.
the major agricultural imports being wheat, rice, sugar,
palm oil, milk, meat, and fish.
The main agricultural exports commodities are cocoa
beans, coffee, copra, cotton, palm-oil and soya bean.
Agricultural contribution to economic activity
The agriculture sector plays a significant role in the Nigerian
economy;
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In spite of the dominance of oil, the sector is the mainstay for the majority of
Nigerians, employing some 70% of the country's labour force.
Most workers in the sector live below the poverty line:
agriculture accounts for some 67% of national poverty, thus the sector is crucial
in national poverty reduction efforts.
Agriculture remains important for the diversification of the economy, in particular
its export structure
Some estimates put the sector's contribution to GDP at 41%.
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Industrial Policy
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The Federal Ministry of Industry's policy objective is to
transform the Nigerian economy from "its rural and agrarian
form to a modern and competitively industrialized one". This
is to be pursued by, inter alia, encouraging the private sector to
play a pivotal role; providing services for the training and
development of indigenous skills and manpower; and financial
support.
Nigeria's current industrial policy thrust is anchored on a guided
deregulation of the economy and Government's disengagement from
activities which are private-sector oriented, leaving Government to play
the role of facilitator, concentrating on the provision of incentives policy
and infrastructure that are necessary to enhance the private sector's role
as the engine of growth.
The industrial policy is intended to:
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Generate productive employment and raise productivity;
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Increase export of locally manufactured goods;
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Create a wider geographical dispersal of industries;
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Improve the technological skills and capability available in the
country;
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Increase the local content of industrial output by looking inward
for the supply of basic and intermediate inputs;
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Attract direct foreign investments (FDIs);
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Increase private sector participation.
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Privatisation and Regulatory Reforms
Growing the Private Sector
The NEEDS aims at addressing the country’s underlying lack of
competitiveness, which has prevented economic growth and
Development from keeping pace with other economies.
The policy thrust is:
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to build a private sector that can take advantage of domestic,
regional and global markets.
The major strategies include:
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re-defining the role of government as a facilitator and promoter in
the economy;
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Strengthening enabling environment through improvement in
security, policy related costs and investment in infrastructure,
especially electricity, transport and water;
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Privatisation and Liberalization and improvement in accessibility to
cheap finance.
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Privatisation and Regulatory Reforms continues
Re-defining the Role of Government
In line with NEEDS policy thrust, government divestment from direct
production of goods was intensified in 2005 and 2006:
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a total of 111 public enterprises have so far been reformed and
privatized, covering major industrial sectors – banking, finance and
insurances; oil and gas; telecommunications; transport and
infrastructure; power and steel; manufacturing and hospitality.
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A total of US$3.66 billion has been realized
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and about US$10 billion annual transfers to public enterprises saved.
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In 2006, 38 privatization transactions were concluded.
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In additions, giant strides in policy, regulatory and institutional
reforms have been made, thereby improving Nigeria’s investment
climate.
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Investment Policy
The Nigerian Investment Promotion Commission Decree No. 16 of
1995
This decree established the Nigerian Investment Promotion Commission
(NIPC) as the successor to the Industrial Development Co-ordination
Committee (IDCC). The NIPC is an agency of the Federal Government of
Nigeria specially established, among other things, to:
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Co-ordinate, monitor, encourage and provide necessary assistance
and guidance for the establishment and operation of enterprises in
Nigeria;
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Initiate and support measures, which shall enhance the investment
climate in Nigeria for both Nigerian and non – Nigerian investors;
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Promote investments in and outside Nigeria through effective
promotional means;
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Register and keep records of all enterprises to which the NIPC
Decree legislation applies;
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Identify specific projects and invite interested investors to participate
in those projects;
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Provide and disseminate up-to-date information on incentives
available to investors;
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Assist incoming and existing investors by providing support services;
and
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Evaluate the impact of the Commission on investment in Nigeria and
recommend appropriate remedies and additional incentives;
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Government Procurement Policy
Public Sector Reforms
The public sector reform agenda focuses on the following:
•Restoration of professionalism in the Civil Service;
• Rationalization, restructuring, and strengthening of institutions;
• Privatization and liberalization in the sector;
• Tackling corruption and improve transparency in government accounts,
• Reduction in waste and improve efficiency of government expenditures;
• and Enhance economic coordination.
In line with NEEDS, between 2004 and 2006, a number of
institutional And structural measures have been put in place to
ensure the achievement of desired objectives. These measures
include:
• Open and competitive tender arrangements for government
contracts;
• Establishment of a due process mechanism to vet and
eliminate ‘fat’ from government contracts;
• Massive anti-corruption campaigns involving all public officials,
including the President.
• Public sector reforms to reduce, if not completely eliminate
opportunities for corruption, especially through the
Comprehensive monetization of benefits to public officers;
• A committed focus on privatization and auctions of
Government licenses (leading, for example, to the liberalization
of the telecommunications sectors);
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Consumer Protection Policy
Existing Consumer Protection Laws
In Nigeria today, there is no single codified document where the
rights of consumers are contained. What one is likely to see are
several legal enactments establishing certain institutions
charged with the responsibilities of determining or regulating
specific areas of consumable goods and services.
Prominent among these consumer legislations are:
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The Consumer Protection Council Act No.66 of 1992
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The Weights and Measures Acts 1974
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The National Agency for Foods & Drugs Administration and Control
(NAFDAC) Act No. 15 of 1993
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The Food and Drugs Act 1974
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The Counterfeit and Fake Drugs and Unwholesome Processed Foods
(miscellaneous Provision) Act 1999
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Nigerian Civil Aviation Authority (NCAA) Act No.49 of 1999
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Standard Organisation of Nigeria (SON) Act
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Federal Environmental Protection Agency (FEPA) Act
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Nigerian Electricity Regulatory Council (NERC) Act
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Trade Malpractices Act 1992
Despite this statutory protection framework, the level of practical
protection has remained rather low. This is because the laws are yet to
take care of some vital aspects of consumer protection. Two of such
areas are compensation for the victims of defective products
or services and right to satisfaction of basic needs.
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Consumer Protection Policy – State of its
Implementation, Consumer Awareness and Existence of
Consumer Organisations.
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With the exception of the Consumer Protection Council Act, all the
other existing consumer related legislations are criminal law based,
which are aimed at punishing the offender and not to compensate
the victim.
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Level of Implementation of Consumer Protection Council Act is low.
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Level of Consumers Awareness is low.
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Absence of small claims court for consumers redress.
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Small number of active Consumer Protection Organisations.
(compared with the size of Nigeria – number of states, population
size etc.).
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Sectoral Policy - POWER
Power Sector
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NEEDS focus is on the provision of adequate electricity supply to the
country.
A major reform in the Power Sector is:
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the enactment of a law in 2005 that removed monopoly power from
National Electric Power Authority (NEPA) and subsequently to the
unbundling of NEPA into 18 successor Companies and
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the formation of Nigerian Electricity Regulatory Commission (NERC).
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With the on-going reform, coupled with the vigorous implementation
of the seven National Integrated Independent Power Projects and
conclusion of the privatisation of the three power plants in 2007,
NEEDS target of increasing electricity generation capability from
4200MW in 2004 to 10,000 by end of FY 2007 was nearly attained.
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Electricity supply remains a major challenge for private sector
Development and competitiveness.
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Sectoral Policy - WATER
National Water Supply Policy
The government of Nigeria has a national water supply policy
whose aim is:
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Provision of potable water to all inhabitants of Nigeria by the
year 2020.
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The present inadequate level of services should be increased to 120
liters per capita per day, and 60 liters per capita per day to urban,
peri-urban and rural areas respectively by the year 2020.
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Increase the capacity of local, state and the federal government to
assist communities to obtain basic water supply facilities that the
communities themselves can maintain with the possible support of
the private sector.
The policy thrust of NEEDS in respect of water is on participatory,
integrated and sustainable water resource management, to meet the
nation’s water needs. The target is to increase water coverage to 70%.
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Sectoral Policy - TELECOM
In 2000, the Government set out a National Policy on
Telecommunications with the overriding objective of modernizing
and rapidly expanding the telecommunications network and services
in Nigeria.
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This has been pursued by allowing more private operators in the subsector.
The short-term objectives of the plan are to, inter alia,
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implement network development projects to ensure that the country
meets and exceeds the ITU recommended minimum teledensity of
one telephone for 100 inhabitants;
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participate effectively in international telecommunications activities in
order to promote telecommunications development in Nigeria, meet
the country's international obligations, and derive maximum benefit
from international cooperation in these areas;
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establish a National Frequency Management Council (NFMC);
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ensure that the Government divests its interest in the state-owned
telecommunications entities;
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promote competition to meet growing demand through the full
liberalization of the telecommunications market; and
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review and update telecommunications laws in order to bring all
telecommunications operators under the regulatory control of NCC.
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Sectoral Policy – TRANSPORT
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Policy initiatives in the Transport sub-sector seek to achieve a
more effective, productive, and safe transportation system.
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A National Transport Sector Policy was developed in 2003. The
policy aims to, inter alia,
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promote trade and transport services through an efficient and
affordable integrated transport network, and transparent and
streamlined administrative procedures based on modern
management techniques;
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improve the safety, security, quality, and speed of movement of
goods and people;
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increase the involvement of the private sector in the financing and
operation of transport-related services;
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structure the infrastructure to ensure environmental sustainability
and internationally accepted standards;
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build a strong financial base for the creation, maintenance, and
upgrading of transport infrastructure; and
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promote public transport over private car travel.
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Sectoral Policy – FINANCIAL SERVICES
The regulatory and supervisory institutions governing financial services
include:
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the Central Bank of Nigeria, which is the highest regulatory and
supervisory authority;
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the Ministry of Finance, which cooperates with the CBN on
monetary matters;
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the Nigeria Deposit Insurance Corporation (NDIC), which
complements the functions of the CBN by providing deposit
insurance to boost confidence in the banking system;
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the Securities Exchange Commission (SEC), which seeks to
promote an orderly and active capital market;
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the National Insurance Commission (NAICOM), which regulates
and supervises the insurance industry;
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the National Board for Community Banks (NBCB), which seeks to
support the establishment and operation of community banks; and
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the Financial Services Regulation Coordination Committee,
which seeks to coordinate the supervision of all financial institutions.
Under the GATS, Nigeria bound, without limitation, cross-border
Supply and commercial presence for banking services. Foreigners,
Corporate or individuals can own up to 100% equity in any
enterprise
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Sectoral Policy – HEALTH SERVICES
Health Sector Policy thrust
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Strengthening of the National Health System;
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Improving the availability and management of health resources
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Reducing the disease burden and improving physical facilities
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(HIV/AID, Malaria, Tuberculoses and STD)
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Improving financial access to good quality health services.
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Anti-competitive Practices
Following are some of the prevailing anticompetitive practices in
the Nigeria market:
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Cartel
Price fixing
Market division
Excessive Pricing
Bid rigging
Tied selling
Price discrimination
Misleading Advertisements
False Advertising
False representation
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Conclusions
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Presently, there is no Competition Law in Place in Nigeria.
Government is committed to developing a law though there is no
consensus on the institution that the competition agency should be
house under.
Efforts have been made to incorporate Consumer Protection
elements into the Competition Bill, and evolve a hybrid agency to
implement it.
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Thank you
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Adedeji, Babatunde Abiodun CStat
CEON, Nigeria
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