Saturday, July 2, 2022

‘Batswana should start own franchises’

Rather than complain about how extremely difficult it is to get into foreign-domiciled franchise operations, the Chief Executive Officer of the Competition Authority, Thula Kaira, has proposed that Batswana should instead start their own.

“How did Nandos start?” he posed when speaking at the Second National Stakeholders Conference on Competition held at the Gaborone International Convention Centre last Thursday.

The answer is as follows: In 1987, a Portuguese-Mozambican called Fernando Duarte and another man called Robert Brozin bought a restaurant in southern Johannesburg called “Chickenland” and renamed it “Nandos” after Duarte. The result was an international brand with presence in the entire southern Africa and countries like Australia, Canada, Fiji, India, Ireland, United Kingdom, United States and Singapore.

Kaira suggested that Batswana could start and popularise “Kealeboga Fish ‘n Chips” or “Dumela Steak” instead of making futile attempts to acquire a McDonald’s franchise which is notoriously difficult to get. To buttress his point, he noted that for just one raw material (he gave an example of a potato) a franchise would insist on a particular size, colour, shape, water content in addition to a slew of other requirements that would prove difficult to satisfy.

One too many speakers from the floor expressed consternation about the manner in which the franchise system generally operates in Botswana. Citing a personal experience, Dr. Collin Monkge from the Vision 2016 Council said that when he opted to buy cheaper submersible pumps in South Africa he was rebuffed and referred back to the more expensive franchise partner in Botswana that he had gone to initially. The Kweneng District Council secretary, Wazha Tema, said that it was patently unfair that those who sought to operate a Toyota dealership needed the consent of the local franchise owner.

In response to these and similar concerns expressed from the floor, Kaira said that commercial enterprises cannot be compelled to do business with particular individuals and that no public office – like the Competition Authority – could even nudge them in that direction. According to him, some local businesspeople have approached the Authority asking it to help them supply particular companies with services and products. Kaira said that indulging such requests would amount to “interference” in the operations of those businesses and a subversion of established commercial practice. Enterprises, he added, want to do business with people they trust, have had a durable relationship with and those who can add value to their operations.

“They don’t want those imposed by a public office such as ours,” he said. As part of its mandate, the Authority authorises and where necessary debars mergers. In her presentation, the Director of Mergers and Monopolies, Magdeline Gabaraane, said that what economic benefit would accrue to citizens is an important consideration when the Authority considers applications brought before it.

Elaborating on this point from a different perspective, Kaira said that the Authority stops anti-competitive behaviour with the hope that Batswana would come forward and avail themselves of the resulting economic opportunity. However, he lamented that does not happen and cited “three or so” transactions that opened up business opportunity for members of the public but had no takers.”This frustrates the process,” he said.

“Playing field” is the metaphor often used with regard to the business environment but judging from some of what was said at the conference, “undrained cesspool of organised crime” would appear to be a more appropriate way to characterise the nature of some local business.

Making a presentation on the mandate of his employer, Tshepo Sayed, an economist with the Public Procurement and Asset Disposal Board, noted some competition concerns that have been brought to their attention. One is bid rigging in which different bidders agree to eliminate competition by fixing prices. Sayed gave an example of five different tender bids – among 20, that quoted the exact same price.”In a way that tells you that somehow the bidders may have colluded,” he said.

He also spoke of instances when procuring entities create entry barriers for suppliers, citing one real example of a “P200/300-million job” in a certain category in which qualifying companies had to have successfully completed a P100 million contract.“But what about suppliers who had just been upgraded?” he queried.

The Competition Authority, which is the secretariat to the Competition Commission, came into being in 2010, a year after the enactment of the Competition Act. Five years prior, the government had adopted the National Competition Policy.

Kaira, a Zambian national, started work in April, 2011. Some Batswana had applied for the CEO post but none among them had a competition background. Generally, expertise in this area in Botswana is woefully lacking and competition as a discipline is not taught at any tertiary education institution. Prior to setting up the Authority, benchmarking was done in Zambia and South Africa because these are the only countries in Africa that have competition commissions. Zambia’s particular allure was that the structure of its economy is a lot similar to Botswana’s. The title of the presentation that Kaira gave was “Competition Culture in Botswana – Are we there yet?” Answering that question, he stated that the answer could not be couched in absolute yes-or-no terms.”We are getting there,” he said.

According to him, the Authority has begun sensitising government ministries and departments about its work and is urging them to adopt competition rules within their own operational systems and processes. He singled out the ministry of finance and development planning as well as that of infrastructure, science and technology among those with whom the Authority has “fruitful relations” with.

In order for the Authority to acquit itself well, Kaira said that it needed to be “credible” itself. At this point at least, part of establishing that credibility takes the form of explaining to the public how it arrives at decisions on applications for mergers and acquisitions. This is done by way of press releases that are published in newspapers after such decisions are rendered.

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