Wednesday, May 25, 2022

Kaira faces Botswana’s closed business

Thula Kaira, the head of the Competition Authority, threatened blood on the carpet against “closed franchises” and “state monopolies” as his organisation is in the process of formulating anti-competition regulations.

“Once you close-out the source of income (business) then you are then restricting wealth to few individuals,” he said referring to closed franchise agreements.

“We need to understand that franchise agreements are contracts that affect society at large. We need to go in there and break that, but we need to understand the industry and see why the structure is like that,” he said, adding, we need to know why only four chain stores are dominating the market while the bulk of Batswana are operating corner shops.

Botswana’s landscape is fraught with anti competitive franchise practices that, if attended to, will revolutionarise the economy of the country. It will lift up productivity and the contribution of the private sector to the GDP– especially the SMEs– something that has been elusive for years.

Kaira’s assignment will need him to develop a-steel-nail strength since it is going to put him face to face against the most influential business people in the society.

He said some of the franchises may need to be disbanded to create room for new market entrants in a bid to spread wealth across the nation and at the same time come up with an efficient market system that takes consumers’ interest into consideration.

“We have got lot of challenges,” he said, “one being that making people aware of what competition law is all about.”

Government has approved a Competition Law, but plans are afoot to make it operational in the not distant future.

Some of the issues that it needs to deal with includes market dominance and abuse, cartels, price fixing or collusion, bid rigging, collective denial, dividing market and the possibility of dumping.

Some of the issues that they will have to deal with include mergers and acquisitions of all types and see whether they are in the best interest of consumers and long term sustainability.

“We need to go in there and break that,” he said, adding that one of the challenges is that people are going to expect quick results.

The organisation will have wide sweeping powers ÔÇô similar to that of tax manÔÇöincluding power to investigate, raid premises and computers and charge wrong doers. Some of the charges could go up as ten percent of the company’s turnover, including imprisonment where possible.

The organisation is expected to be beefed up by accountants, investigators, economists and lawyers at full operation.

“We also need to market competition to government as well,” he said.

He said in some instance it would not be prudent for government to dominate the industry, giving an example with the power industry.

He said in that case, they might recommend some liberalisation of policy, such as breaking down the industry into, power generation, distribution, connection, and others to ensure that there is efficiency and room for other market players- especially the small medium enterprises.

“Abuse of market position is one of those issues that we need to deal with. At times companies divided the market amongst themselves,” he said.

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