Monday, October 25, 2021

Botswana should leverage on Competition Law to help create wealth for its people

On Thursday, the Competition Authority (CA) shared details of their first ever post-merger survey with journalists in the capital Gaborone.

As we all might be aware, the Authority has been assessing mergers and acquisitions of companies across different sectors of the economy as well as making determinations pertaining to such mergers and acquisitions for the past six or so years. The most prominent ones were in the retail sector where big players such as Sefalana Holdings and Choppies Enterprises are key players ÔÇô such were not included in the recent survey though. The merger assessment provisions for the local authority are contained under Part X of the soon to be amended Competition Act.

Globally, there is a general consensus that competition agencies should regard evaluation programs as necessary as well as integral elements of good public administration. The post-merger impact assessments such as the one that has been carried by CA are intended to establish the market effects of the decisions they took in the past. That is to say, the role that the authority plays in levelling the field of play in any sector does not end at the stage of issuing a decision but extends to the post-decision stage through conducting compliance monitoring and post-merger impact assessments.  The authority as such shared the findings of the survey they carried on mergers and acquisitions they ruled on since 2011.

This commentary however is focused on the effectiveness of the authority in the domestic economy ever since it was set up more than five years back. The Competition Authority as we all know is a public institution paid by taxpayers’ money. Hence, it is only fair that every now and then it given audience to account about its activities. As it does so, there is need for it to duly quantify or qualify the effectiveness of its work on the lives of Batswana. This expectation is held with full knowledge that the measurement of effectiveness of the authority is always going to be an ongoing process. It is a question of continually monitoring and assessing the legal framework, the processes as well as resources, in order to ensure that they reflect on the domestic economy. It is a good that as we write this, the Parliament is debating a law that would bring a few changes to the competition space in the country. Prominent in the new competition law is that, in order to guarantee impartiality & objectivity, the amendment provide for a separation between the authority in charge of investigation and the one in charge of adjudication. It is however unfortunate that the draft of the new legislation clearly shows the resistance of the government to let the authority becomes an “authority”.

The new law seems to have once again failed to put in place safe guards that will ensure insulation from political control of the Competition Authority. In the past, the World Bank suggested that in order to ensure sufficient independence, members of competition agencies should not be appointed directly by head of state and that the agency should be separate from a government ministry, with its own budget. Here at home, despite the ongoing revision of the competition law, it seems the CA is stuck with Trade, Investment and Industry ministry. The minister continues to be the appointing authority when it comes to the competition agency’s board. This new law as such appears to us as just being partially good on paper and will bear no positive consequences to the local consumers as well as Batswana in general.  We say this because many jurisdictions globally have adopted measures to ensure the independence of their Competition Authorities.

 

If it was properly revised the new Bill opened an opportunity to elevate Botswana to the level of highly developed market driven economies.

Given the increasing dominance of foreign companies, more especially in the banking sector and the need to promote the growth of citizen owned business, there is need to use all available pieces of legislation, including the new competition law to empower our people.

As we all know, generally on paper – Botswana seems to be doing very well when it comes to citizen economic empower. We have been told about the beneficiation and aggregation of diamonds in Botswana, the establishment of support institution such as LEA, CEDA, to mention a few. But practically the story on the ground says otherwise. Even the renewed focus on citizen economic empowerment through the revised PPAD Act that has been preached over the past few years has little impact on creating wealth for Batswana. The continuous call on Government agencies to procure 100 percent of goods and services from Batswana companies was welcome from day one. However, the benefits can only be derived from effective implementation and monitoring as well as support from the private sector. This seems not to be the case at the moment. As it stands, multi-national companies in Botswana continues to source most of their raw materials outside the country and do not generally support local SMMEs.

It was therefore our hope that the revision of the Competition Law would address such matters, perhaps by giving the authority more powers and most importantly ensuring that it is always sufficiently resourced, both financially and human capital wise.

At the time of drafting the existing law, the need for a sound economic diversification strategy was highlighted and it was believed at the time that competition legislation would come in handy. The question that one has now, after six years is whether the establishment of the Competition Authority has had any positive impact on the diversification drive?

To rephrase the question, ever since the arrival of CA, are dominant players, in any given industry in Botswana, still enjoying a protected operating environment and still dictating terms to smaller players seeking a foothold in the market or the weather has changed?

The answer to the question is important, but what is also vital going forward, is that the Authority should through its action reassure the public that it is balanced, ethical, fair and indeed above board.

The #Bottomline therefore is that since the latest review of the competition law did not address other challenges, there is need to constantly review it. This would help make it more business friendly but more crucially upgrade its effectiveness when it comes to creating wealth for Batswana.

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