REGULATORY FRAMEWORKS
AND ECONOMIC
DIVERSIFICATION
Laws, Institutions and Likely Effects
Gape KABOYAKGOSI
&
Masedi MOTSWAPONG
27/08/2014
INTRODUCTION
 Regulation
IS a tool of government-growing in use!
 From government ownership to ‘arms-length’ regulation
(globalisation, marketisation, & privatisation)
 NOT studying (social regulation: the control of the effects
of capitalism on people)
 Institutions do matter (NIE) conception. What limits on
government power?
 Law
 Organisation
 Culture
OBJECTIVES
 Review the implications of regulatory
arrangements on diversification
 Develop a framework to predict the likely
effects of regulatory instruments on economic
regulation
Name of Regulator
BOCRA
Civil Aviation Authority
Law Society of Botswana
Architects Reg Council*
Sector
Telecommunications
Air Transport
The Legal Fraternity
Architects
Year
1996
2004
1996
2009
Type of Regulatory Institution
Independent Regulator
Independent Regulator
Self regulator
Self regulatory
Botswana Inst of Accountants*
Botswana Stock Exchange
Botswana Examinations Council
Botswana Bureau of Standards
Botswana Training Authority
Financial Intelligence Agency
Botswana Press Council
Botswana Health Profs Council
Engineers Registration Board
Accountants
The Stock Exchange
Examinations standards
Various
Education
Financial
Print media
The health professions
Engineering Profession
2010
1985
2007
1995
2002
2009
2002
2001
1998
Self-regulatory
Independent Regulator
Independent regulator
Standards Authority
Independent regulator
Semi autonomous government Dpt
Self regulatory authority
Self-regulatory
Self regulatory agency
Botswana Examinations Council
Dept of Environmental Affairs
Schools examinations
Environment
2002 Independent regulator
2005 Government department
National Broadcasting Board**
Botswana Training Authority
Tertiary Education Council
NBFIRA
Bank of Botswana
The media
Telecommunications
Tertiary education
NBFI
Monetary policy
1999
2002
2002
2008
1975
Independent regulator
Independent Regulator
Independent regulator
Independent regulator
Independent regulator
JUSTIFICATION
i.
The limits of the ‘good governance’ metaphor
i.
Many regulatory agencies coming up to manage
policy
i.
A signal of commitment to external players
ii.
Instrument to ‘capture’ certain activities
i.
Regulation imposes costs [RIA] [FIAS/BIDPA
i.
Interact with external business regimes
APPROACH
 Review of laws and organisations # non
mining industries
 Laws are enforceable and policies are not
 Note that the EDD Strategy falls firmly in the
latter
THEORY & INSTITUTIONALISM
 Economic theory
 Principal Agent
 Public interest
 Types of Regulatory Entity
 Social v Economic Regulation
METHODOLOGY
 Use of past BIDPA studies
 Desk Review
 Legal Review
 Review of Official Documents
POLICY APPLICATIONS
 Advocacy for regulatory reform
 Development of framework.
 Contestability (highly competitive? High
product/service differentiation?]
 Ownership type (majority government? Private?]
 Credibility (role of the minister? How predictable?
Competitive neutrality?]
 Entry/exit rules
RESULTS: AIR TRANSPORT
 Air Transport:
 Loss making airliner/protected from
competition
 BASA and protectionism
 Domestic entirely protected
RESULTS: BMC
 BMC
 Poor performing monopoly
 Domestically entry is allowed
 Exports are disallowed-what’s a small
economy to do?
RESULTS: TELECOMMUNICATIONS
 Telecommunications
 Three players in Mobile
 Highly competitive for price
 Highly diversified for products
 SMS + VoIP + Money Transmission etc
 Model to copy?
RESULTS: ELECTRICITY
 Legal monopoly # ESA
 Very poorly performing state owned
utility
 Electricity needed for economy to
thrive
 Minister may approve competitor
RESULTS:COMPETITION
REGULATION
 Ought to enable entry and diversity
 Ought to ensure discipline and fair-play
 Has exemptions that ‘kill’ competitive
neutrality
REGIONAL INTEGRATION
 Botswana member of SACU; WTO; UNCTAD
etc
 Some laws restrict capacity to
innovate/grow/diversify
CONCLUSIONS
 Laws too restrictive for ‘things’ that allow
diversification
 Diversification efforts too ‘govt-centric’
 Credibility needs consideration
SOLUTIONS SET?
 Separate political influence from economic
decision making
 Set up mechanisms to restrict the discretion
of regulators
 Build more robust acocuntability
 Take government out of business/increase
competition