Only 13 countries in Africa had competition laws in place by the year 2000. By 2015, this number increased to 32, with 25 jurisdictions in Africa having operational competition authorities [1]. This shows that competition authorities in Africa are gaining ground. From South Africa to Kenya and Zambia, with newer competition authorities in Angola and Nigeria. While growth in competition enforcement is experienced in Africa, having a mechanism to measure not only competition authorities’ outcomes on enforcement, but the general state of health of competition authorities is vital. Knowing the state of competition authorities’ autonomy, advocacy efforts, resource availability and information and data systems is requisite. An Africa focused competition performance index [ACPI for the purpose of this blog] can extend the measurement of antitrust performance by existing indices, to include not only enforcement outcomes but the status of competition authorities. The ACPI can lay the groundwork for exceptional regional competition policy implementation in Africa.
Why an index for competition policy implementation in Africa?
An index allows measurements and comparisons based on a set of indicators or data points. For example, the World Economic Forum’s Global Competitiveness Index assesses countries’ ability to foster economic prosperity and productivity. The index captures, for each country in the world, indicators such as the ease of access to loans, transport infrastructure, corruption levels and banking system strength [2]. Another index, the World Bank’s Ease of Doing Business Score, ranks countries on business regulation performance with indicators such as ease of getting electricity, getting property, paying taxes and others [3]. Also, the Global Multidimensional Poverty Index (MPI) measures poverty and deprivation using indicators of education, standards of living and health access to compare the levels of deprivation which people experience in their daily lives across 41 countries globally [4].
Similar to how other indices work, a competition index generally measures the health and performance of a competition authority, the implementation of the competition act, and the state of competition in markets.
Given the continent’s late foray into antitrust law, the peculiarity of African markets, and the fact that Africa cannot always be compared to the world, especially in the area of competition law, an ACPI would be valuable for the continent. The index can sensitize African competition authorities on their levels of enforcement of competition law and modus operandi, compared to their peers. This will provide the opportunity for laggards to catch up in fulfilling their mandate and fast-track the development and implementation of competition policy in Africa. Additionally, continent wide initiatives such as the African Continental Free Trade Area (AfCFTA) agreement’s Competition Protocol will have solid evidence-based insights on not only the state of competition in African markets, but on the capability of competition authorities.
How to: Indicators, metrics and stakeholders
If the ACPI is to be developed, how would the continent go about this? A good place to start is to conduct a review of existing antitrust related indices and associated indicators. Currently existing indices and sources of antitrust information are the Global Competition Review (GCR), Bertelsmann Transformation Index (BTI), and the OECD Competition reports. The GCR provides benchmarking reports, data and analysis on antitrust law and policy enforcement from around the globe. BTI measures transformation in governance, politics and the economy and includes competition policy effectiveness as an indicator for economic transformation. The OECD Competition reports provide information on the state of competition policy design and practice in OECD countries. Additionally, industry reports and peer reviewed research papers are good sources of information. This can be supported with university research center collaborations. Competition experts, business schools with established industrial organization and antitrust expertise, would also be valuable in building an ACPI.
Since the focus of the index is to facilitate cross-country comparisons across African competition authorities, though existing indices provide a knowledge base to build on, this may be insufficient. This is because existing indices like the GCR and BTI have a global focus, and are majorly aimed at measuring outcomes of enforcement activities. What African competition authorities require presently to enhance competition policy adoption on the continent is comprehensive information. The index can reveal what successful African competition authorities are doing and how they are doing it, rather than only enforcement outcomes.
Indicators
A conference paper I co-authored in 2015 systematically reviewed institutional mechanisms for successful competition policy implementation in developing countries. The paper identified and ranked the most common and recurring institutional mechanisms (IMs) or indicators in literature for successful competition policy implementation [5]. This list can be considered in the development of the ACPI:
Autonomy of competition authority
Independent & effective judiciary system
Competition advocacy, awareness & education
Resource availability & use (human, administrative e.g. IT networks and financial)
Capacity competence development
Experience and knowledge sharing mechanisms
Coordination and dependency among relevant agencies /institutions & stakeholders
Impact of competition policy on other policies
Situation analysis and market monitoring mechanisms
Transparent processes and systems
Regional collaboration of competition authorities
Existence of effective competition policy
Competition research development
Effective & efficient enforcement mechanisms
Accountability
Role & influence of sectoral regulators
Metrics
While a quantitative approach is ideal for an index’s development, qualitative data and other descriptors can supplement the information competition authorities provide. The BTI uses a Likert scale (1-10) to rate the existence of an ‘independent’ competition authority, membership of the International Competition Network (ICN), transparency and legal certainty of judicial decisions in a country. However, these basic market economy characteristics are only a start and are incomplete in measuring the overall health of a competition authority [6]. Hence, the need for a comprehensive set of metrics that can be built from the IMs above. This can be supported by statistically rigorous approaches, which are simple to implement for index calculations. A tool such as the European Union’s Competence Center on Composite Indicators and Scoreboards (COIN) can be utilized [7].
Stakeholders
There are three main stakeholder categories that can be involved in the development and maintenance of the ACPI. They are: National competition authorities, regional competition regulators and other African institutions. National competition authorities would be involved in the periodic completion of questionnaires sent to them by coordinating African institutions, such as AfCFTA and the Economic Commission for Africa (ECA), for yearly updates of the index.
The maintenance of the index can be done by regional competition regulators. Regional regulators such as the Common Market for Eastern and Southern Africa (COMESA), ECOWAS Regional Competition Authority (ERCA), the Economic and Monetary Community of Central Africa (CEMAC), the West African Economic Monetary Union (WAEMU) and East African Competition Authority (EACA), can house the ACPI’s output and make competition authorities’ ratings digitally available.
References
https://www.lexafrica.com/2018/08/developments-in-competition-law-in-africa/
http://reports.weforum.org/global-competitiveness-index-2017-2018/
https://www.doingbusiness.org/en/data/doing-business-score
http://hdr.undp.org/en/2021-MPI
https://www.researchgate.net/publication/319102329_A_Systematic_Review_of_Competition_Policy_Implementation_Institutional_Mechanisms_for_Success
https://bti-project.org/fileadmin/api/content/en/downloads/codebooks/BTI_2020_Codebook.pdf
https://ec.europa.eu/jrc/sites/default/files/jrc-competence-centre-composite-indicators_en.pdf
Author's bio
Oluwatobi Ogundele's economics experience and interests have been in the areas of competition law and policy, health and migration. She has masters degrees in Economics and in International Public Policy with specialization in International Economic Relations and Global Governance.
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