1. Gape KABOYAKGOSI & Masedi MOTSWAPONG 27/08/2014 REGULATORY FRAMEWORKS AND ECONOMIC DIVERSIFICATION Laws, Institutions and Likely Effects

2. 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

3. OBJECTIVES Review the implications of regulatory arrangements on diversification Develop a framework to predict the likely effects of regulatory instruments on economic regulation

4. Name of RegulatorSectorYearType of Regulatory Institution BOCRATelecommunications1996Independent Regulator Civil Aviation AuthorityAir Transport2004Independent Regulator Law Society of BotswanaThe Legal Fraternity1996Self regulator Architects Reg Council* Architects2009Self regulatory Botswana Inst of Accountants*Accountants2010Self-regulatory Botswana Stock ExchangeThe Stock Exchange1985Independent Regulator Botswana Examinations CouncilExaminations standards2007Independent regulator Botswana Bureau of StandardsVarious1995Standards Authority Botswana Training AuthorityEducation2002Independent regulator Financial Intelligence AgencyFinancial2009Semi autonomous government Dpt Botswana Press CouncilPrint media2002Self regulatory authority Botswana Health Profs CouncilThe health professions2001Self-regulatory Engineers Registration BoardEngineering Profession1998Self regulatory agency Botswana Examinations CouncilSchools examinations2002Independent regulator Dept of Environmental AffairsEnvironment2005Government department National Broadcasting Board**The media1999Independent regulator Botswana Training AuthorityTelecommunications2002Independent Regulator Tertiary Education CouncilTertiary education2002Independent regulator NBFIRANBFI2008Independent regulator Bank of BotswanaMonetary policy1975Independent regulator

5. 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

6. 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

7. THEORY & INSTITUTIONALISM Economic theory Principal Agent Public interest Types of Regulatory Entity Social v Economic Regulation

8. METHODOLOGY Use of past BIDPA studies Desk Review Legal Review Review of Official Documents

9. 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

10. RESULTS: AIR TRANSPORT Air Transport: Loss making airliner/protected from competition BASA and protectionism Domestic entirely protected

11. RESULTS: BMC BMC Poor performing monopoly Domestically entry is allowed Exports are disallowed-what’s a small economy to do?

12. RESULTS: TELECOMMUNICATIONS Telecommunications Three players in Mobile Highly competitive for price Highly diversified for products SMS + VoIP + Money Transmission etc Model to copy?

13. RESULTS: ELECTRICITY Legal monopoly # ESA Very poorly performing state owned utility Electricity needed for economy to thrive Minister may approve competitor

14. RESULTS:COMPETITION REGULATION Ought to enable entry and diversity Ought to ensure discipline and fair-play Has exemptions that ‘kill’ competitive neutrality

15. REGIONAL INTEGRATION Botswana member of SACU; WTO; UNCTAD etc Some laws restrict capacity to innovate/grow/diversify

16. CONCLUSIONS Laws too restrictive for ‘things’ that allow diversification Diversification efforts too ‘govt-centric’ Credibility needs consideration

17. 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