1. Priority Issues and Challenges for Competition Reforms in 7 UP 4 Countries Lahcen ACHY Carnegie Middle East Center Beirut Research Adviser for 7UP4

2. Outline Profile of the 7UP4 countries Two key lessons Three Priorities Three Challenges

3. Profile of the 7UP4 countries ◦ Economic Background  High reliance on agriculture particularly for jobs  Large share of informal urban sector  Low income countries  High reliance of ODA (except Nigeria)

4. Profile of the 7UP4 countries (2) ◦ Recent historical background  Central planning and State-led growth after independence  High debt and macro economic mismanagement in the 80s  Structural adjustment programs in the 80s and 90s  Poverty reduction strategy and SGR in last decade

5. Profile of the 7UP4 countries (3) ◦ Legal and regulatory  Burkina, Senegal and Mali competition laws adopted since mid nineties. Togo since 1999. The Gambia more recently  Nigeria and Ghana: draft laws exit but not yet adopted  Apart from Nigeria, there is no specific law on consumer protection in the six other countries.  But many pieces of legislation on consumer protection exist. Competition authority is empowered to protect consumer interests to some extent (Burkina, Senegal, Togo).  All 7UP4 countries are members of WTO and ECOWAS  Four of them are members of WAEMU (B,M,S,T)

6. Key lessons 1. Pro-competition policies adopted in 7UP4 countries as part of their structural adjustment programs had adverse effects on consumers and domestic small businesses

7. Broad lessons (2) Case of Agriculture Policy ◦ Removal of subsidies and guaranteed prices ◦ Privatization and attraction of foreign investors ◦ No input subsidies: lower use of selected seeds and fertilizers  decline of productivity  Lower production for small farmers ◦ No State guaranteed prices for output  small farmers targeted by large traders  lower prices  Lower revenues for farmers ◦ Openness to food imports had negative impact: on local production: Agriculture special case by competition policy in developed countries (US, EU): exemptions and subsidies

8. Broad lessons (3) Case of Investment Policy ◦ Removal of restrictions on foreign ownership ◦ But FDI not up to expectations:  In terms of their amount  In terms of orientation : rent seeking with no spillover on the rest of the economy  In terms of contractual provisions  FDI because of size of projects has access to incentives (fiscal rebates, cheaper land) that don’t benefit other investors  large multinationals dominate market and crowd out domestic firms of smaller size and modest technology ◦ In most countries, industrial sector declined since the 80s

9. Broad lessons (4) Case of Privatization Policy ◦ Privatizations and disengagement of the State in heavily indebted public enterprises ◦ In some cases, public monopolies were privatized as contracts of exclusivity, providing monopoly powers to the private sector with serious competition concerns ◦ Privatization of basic services (water, electricity) without provision of a minimum universal service for the poor had its social cost.

10. Broad lessons (2) 2. Complex overlapping regulations  Inconsistent with economic structure  Poor enforcement even when regulations exist  In Burkina, Senegal and Mali competition adopted since mid nineties. In Togo since 1999.  Political economy of Interference and diluted responsibilities  Cartels and abuses of dominance are dealt with at the level of WAEMU (Precedence on national law)  ECOWAS Treaty (1975) does not make clear reference to competition. But competition regulations are embodied in two Supplementary Acts adopted in Abuja in 2008

11. Priorities In terms of approach 1. Streamline and rationalize regulations (RQ)  Content  Institutional architecture and sharing of responsibilities  Avoid conflicts of jurisdictions  Grant more responsibilities to national authorities in sanctioning anti- competitive practices. 2. Focus on most abusive practices to consumers and business

13. Priorities In terms of sectors 3. Focus on sectors that would make a substantial difference for the poor ◦ Agriculture ◦ Basic services (social and backbone services for business)  Water  Electricity  Telecommunications ◦ Public procurement s  Size: largest buyer  Allocation: use public money  Equity: services key to the poor: education, health and infrastructure

14. Challenges 1. Strengthen State Capacity ◦ Market economy needs strong and effective state  Rule of law: contract enforcement  Effectiveness: capacity to negotiate and to manage  In both cases need for more resources (human and financial)

16. Challenges (2) 2. Strengthen the advocacy role of CSOs ◦ Provide more space to consumers’ associations  Politically: voice and accountability  Legally: recognition of CSOs and their role ◦ Build their capacity and support them play effectively their role (raising awareness and advocacy)

19. Challenges (3) 3. Advocacy for better international governance  Domestic solutions are only part of the solution  Negative effects of absence or lack of competition in poor countries is largely due to  Impact of powerful multinationals  Impact of state subsidies in developed countries

20. Thank you for your attention ****