The extent of the economic impact of COVID-19 on economies around the world is still unclear. The severity of the viral epidemic and the timing of the resumption of economic activities has affected African markets with significant ripple effects on the continent. To keep markets and the economy functioning, governments intervened. In Africa, COVID-19-induced policies focused on measures that allowed economic activities to continue at a minimum level while preserving employment. Sound competition law and policy during this period was very important for building resilience and some level of flexibility in African markets. While many Competition Authorities (CAs) in Africa did not change their modus operandi, others actively addressed competition issues in relevant markets.
This blog highlights empirical evidence from a World bank data set of 30 African countries from 2016 - 2021 on measures implemented by African Competition Authorities during COVID-19, the factors that influenced the decision of Competition Authorities to introduce new measures during COVID-19 and how this impacted the annual GDP growth rate of these countries.
Overview of new competition-related measures introduced by African Competition Authorities
The analysis of the World Bank’s panel dataset showed that only fourteen African countries adopted new competition related measures or policies during the pandemic. The dataset showed that nearly 50% of the 30 African countries adopted new measures during the COVID-19 pandemic. Of the 14 CAs that adopted new competition measures, six introduced electronic merger filings (Botswana, COMESA, Egypt, Eswatini, Kenya and Zambia), seven formally imposed regulations regulating the price level of essential and sanitary products (COMESA, Egypt, Eswatini, Gabon, Morocco, South Africa, Tunisia) and only three CAs (Egypt, Mauritius, Nigeria) provided guidance to businesses in relation to competitor collaborations to ensure the supply of essential products during the pandemic period.
What factors influenced the decision of Competition Authorities to introduce new measures during COVID-19?
The empirical analysis revealed that the level of development, the level of experience of the CAs, the degree of responsiveness from passive behaviours to active implementation of strategies, the number of country wide COVID-19 cases reported, the number of COVID-19 death cases and the length of closure of borders were strong determinants in influencing the decision of CAs during the COVID-19 pandemic. However, the strongest determinant of whether a CA imposed new competition regulation/measures was the number of COVID-19-related deaths which was found to have thirty-seven times more influence than the actual COVID-19 cases.
Effectiveness of measures and impact on annual growth rate
Observing the annual GDP growth of these countries, those that adopted new competition policy/measures seem to have had, in 2021, a higher growth rate than those that did not (almost 6% GDP growth rate for adopters versus almost 4.5% for non-adopters, see Figure 1).
Annual growth rate comparison between African countries whose CAs adopted new competition-related regulations/measures versus non-adopters
Source: World Bank, Annual GDP Growth rate, 2017 -2022
However, in 2022, a reversal seemed to have occurred, where countries that did not have a competition regulation change during the pandemic performed slightly better than those who had some change in competition regulation or who introduced new competition measures. One possible explanation for such a boost in their growth could be the impact of the imposition of macroeconomic policies and regulation that these countries may have adopted. Another is that an observed decline in growth rate occurred in 2022 across board and entire growth effects may need to be captured over a longer period. However, this is yet to be determined.
Disclaimer: The opinions expressed in this article are those of the author and do not reflect the views of the Competition Commission of Mauritius. For additional details on the paper, see the author’s published work Competition policy responses to COVID-19 in Africa
Author's bio
Prishnee Armoogum is currently an Investigation Officer (Economics) at the Competition Commission in Mauritius and has been in the field of Competition/Antitrust for over 10 years. She has conducted numerous empirical studies assessing the performance of competition authorities and studied the degree of convergence of competition laws in the Southern African region. She was seconded to the Competition Commission of South Africa and has also worked as an intern at the Office of Fair Trading in the UK.
Prior to working in the competition space, she previously worked as a team lead in the private sector and as a part-time lecturer at the University of Technology in Mauritius. She has a PhD in Economics from the University of East Anglia, an MSc in Economics and Financial Management from Middlesex University, and a BSc (Hons) in Economics and Finance from the University of Mauritius.
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