1 competition scenario in the gambia promoting a healthy competition culture in sub-saharan africa...

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COMPETITION SCENARIO IN THE GAMBIA

Promoting a Healthy Competition Culture in Sub-Saharan AfricaGaborone, Botswana14-15 February 2008

Garba Jahumpa Road, Bakau, K.S.M.D. The Gambia. * Tel: (220) 4494338 Fax: (220) 4494219

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Facts about The Gambia:

Small country (about 1.5 million) Small market sizeSmall private sectorDependent on tourism, re-export trade and agricultureA tax-based economy (around 85% of GLF)58% of the population are considered poor The Country is still largely a groundnut garden; Industry still struggling to emerge; a vibrant, expanding service sector


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BACKGROUND:The Gambian government publicly espouses a liberal, free-market economy and recognizes the potential of the private sector as the engine for growthThe 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) 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


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Measures already taken:


Reducing the extent of state ownership of public enterprisesElimination of price controls The adoption of a divestiture policyThe establishment of a Divestiture AgencyThe creation of a system of licensing the public utilities (with

the expectation of greater private sector involvement)Trade liberalization programmesAnd recently, enacted a Competition Act

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Regulatory Mechanisms: The Central Bank of The GambiaThe 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


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Premise of the Competition Act (2007):


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 GambiaTo demonstrates the government’s commitment to a free-market

economyTo 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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Monopolistic Sectors:

• Electricity

• Water

• Television

• Defense


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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 (lack of democracy in access, misuse of market power, predatory pricing, etc)

• Benefits to consumers: slashing of product cost, elimination of validity, better services, lower rates etc.


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Anti-Competition Issues in The Gambian Economy

1. Direct Government policies


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Direct Government PoliciesLack 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 the economy could lead to anti-competition (eg. TAF construction 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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Direct Government Policies:

The non- existence of a Telecoms bill in the industry has given rise to anti-competition tendencies in the Gambian economy. The divesture program of Government of key institutions without going through an international bidding process opens up the possibility of “arrange buying” with a view to dominating the market. The existence of government monopolies which are poorly run are anti-competitive in their nature.


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Anti-Competition Issues in The Gambian Economy

2. 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: Small private sector – Easy for a handful of operators to control a certain sector of the economy Collusive horizontal agreements (those involving collusion between businesses operating in the same market and hence normally competitors) to exclude new entrance into the sectorExamples: Vertical agreements between importers and distributors - The consumers goods sector like Rice, Cooking Oil and Sugar The rigging of Bids is common practice in both State and non-state actor spheres.Private schools urging students to buy uniforms and other products from them at a price that may be above that of the market is anti-competitive.


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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 (tacit understanding among importers to collude).

• Tied-selling: A wholesaler interested in Sugar has to buy sugar and rice from the importer.

• The same system is replicated between the wholesalers and the retailers at the local level

• Some wholesalers are also active in the retail market of the products they sell, thus elbowing out the retailers they supply. They end up monopolising the business for their product


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Challenges:A competition act, but no competition policy; the competition commission still a distant reality!Lack of expertise and resources to engender a viable competition culture. Capacity building and human resource development is necessary to ensure that regulatory agencies can fulfill their mandate effectively and are shielded from undue pressure and interference from political circles and decision-makers.Need for regional approach and the development of regional standards.


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The Way Forward:• The setting up of the Competition Commission• Building capacity of National Stakeholders (With

Technical Assistance from CUTS International)• Strengthening of regulatory institutions: The

Divestiture agency, The Central Bank and the Public Utilities Regulatory Authority (PURA)

• The promotion of a strong political will to foster a healthy Competition Culture

• The development of a Competition and Consumer Policy for The Gambia


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THANK YOU FOR YOUR

ATTENTION ! !


1 competition scenario in the gambia promoting a healthy competition culture in sub-saharan africa...

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