Transcript Malawi Competition Regime Country Paper By M G Tsoka Centre for Social Research

Malawi Competition Regime
Country Paper
By M G Tsoka
Centre for Social Research
Outline
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Introduction
Policies related to competition
Competition and Consumer Protection Laws
Competition Commission and Consumer Protection
Council
• Nature of the Market
• Government commitment
– Implementation of policies and laws
– Budgeting for C & CP
• Conclusions
Introduction
• Competition studies in Malawi are very rare
– So far only CUTS supported competition and consumer
protection studies (C&CP)
– Government interest drives research
– Public interest also drives research
– Both are conspicuously absent and the presentation will
show the side of the Government
• There has been no serious resource flow for C&CP
by both government and donors in Malawi
– USAID funded CAMA, a consumer rights body that also
worked together with CUTS to conduct the first ever
competition study
• No choice but use findings from the CUTSsupported studies
• Has some updates on few areas
Competition Policies
• Following inefficient import substitution,
Government introduced a host of competition
enhancing policies namely (i) investment promotion
(ii) integrated trade and industry (iii) micro and
small enterprise (iv) micro finance policies and
ultimately (v) competition.
• The Public Procurement Act promotes competition
among suppliers to public sector institutions
• Some policies were followed by legislation, e.g.
Competition and Fair Trading, the Consumer
Protection and Public Procurement Acts
• Government has also launched the Malawi Growth
and Development Strategy (MGDS) to replace
MPRS and MEGS and any other
MGDS and C&CP
• Described as an overarching operational
medium-term strategy for Malawi
• Said to build on MEGS which has C&CP yet
silent on the role of CA &CPA
• Recognises lack of competition in energy
(monopoly) and road transport (associationcreated)
• Provides for public-private partnership in
energy generation and supply but none for
road transport
• MGDS does not provide for competition in
general and consumer protection
Nature of the market (1)
• The Malawi economy is small; GDP
averaged less than US$2 billion over
the 2000-2004 period; US$2043 in
2006.
• In per capita terms, the average is less
than US$200 per annum; US$160 in
2006
• This income includes value-added
estimated for non-monetarised
economic activities
• This may limit number of players in
some sectors
Nature of the market (2)
• SOE and state supported enterprises effectively
reduced prospects for competition although
privatisation has introduced some competition
• The manufacturing sector is still inward-looking
and has limited competition, diversification and
inter- and intra-industry linkages despite years of
reforms and privatisation
• Associations choke competition in various sectors
through price fixing and market sharing, among
others
– Government seem to dislike some of them
despite urging for their formation originally
mainly for orderly engagement
• Collusions, even outside associations, exist as the
few players in sectors reach ‘gentlemen
agreements’
Sector state of competition
• There is limited market competition in the
franchise dominated sub-sectors (beer, soft
drinks and motor vehicle and genuine spares sales)
• Utilities face no competition. The sale of the sole
telecom company is expected to bring competition
but is still not there
• There two mobile phone companies with some
competition; mainly focusing on service
differentiation but eventually matching
• The financial, meat processing and diary sectors
have competition thanks to privatisation
• Privatisation has not benefited the sugar sector
• Foreign firms offer competition in consumer
goods, edible oils, soaps and household and nondurable goods markets through imports
Market concentration
• In sugar, soft drinks, beer and biscuits
manufacturing there is virtually one owner
in each
• In telecommunications there are only two
owners and one of them (recently
privatised) owns ground and mobile phone
companies in a three-company sector
• This state of affairs is common in many
others only that the consequences of high
concentration are eased by imports
Local firms competitiveness
• No major study has been done
• However, the shrinking manufacturing
sector is a possible sign of lack of
competitiveness
• Local firms blame it on unfair competition
and unsupportive business environment
• Analysts put the blame on firms’
inefficiencies and use of obsolete
technology, high import content in inputs
and high interest rates
Regulation, C and CP
• The pharmaceutical sector is regulated but regulation
impedes competition. Number of players and applicants
is healthy.
• The financial sector is adequately regulated and
monitored. Regulations may not have caused entry
failure but Competition may be hampered by
‘established’ players. RBM de-licensed one CB in 2006
• The power sector is undergoing sectoral reforms.
Malawi Energy Regulatory Authority has just been
formed. Hopefully PPP in power follows soon
• The telecommunications sector is regulated.
• Its regulatory body has been plagued by governmentopposition wrangles. It is yet to provide a license to a
third mobile phone operator, three or so years after
application
Barriers to entry
• There are no serious administrative
and legislative entry barriers
• Minimum capital requirements are
some entry barriers in the financial
sector
• Speed of company registration is a
possible entry barrier in Malawi
despite efforts to shorten the period
• Lack of a sea shore and quality of
human resources are ‘natural’ barriers
for export-oriented enterprises
Legislation on competition
• Government enacted the Competition and
Fair Trading Act in 1998 and provides for
a competition authority including its
powers and functions.
• The law covers critical issues of dominant
firm, collusions and price fixing
associations, mergers and acquisition and
monopolies and oligopolies
• It does not adequately deal with crossborder trade-related anti-competitive
practices like informal trade and dumping
CP legislation
• Consumer Protection Act was enacted in
2003 - provides for a Consumer Protection
Council
• The law covers most of the key consumer
protection issues including seeking
compensation for the affected consumers
• The council’s functions are comprehensive
but its powers are limited even in
investigation.
• The Council is yet to be established
Govt commitment to C&CP
• Policies and laws exist for C&CP
• CA members appointed in 2005
• MGDS not friendly to C&CP – not even
mentioned as strategies for poverty
reduction
• Budgets have not provided for a fullyfledged CA secretariat since 2005
• CPA councilors not yet appointed
• Attendance of country competition
meetings and workshops very poor except
the Chair and some members of the CA
Conclusions
• ACPs exist in Malawi. They have evolved
depending on policy and legislative environment
• Most of them owe their existence to poor
economic policies adopted after independence
and most of them owe their continued existence
to the absence of an effective CA and CPA
• Malawi has policies and legislation for C&CP but
lacks the will to implement them by the setting
up of functioning CA and CPA
• Possible reason: Low priority accorded to C&CP
by Government
Thanks a lot for
your kind attention