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State of Competition Regime in Ghana

Preliminary Country Paper

ISSERUniversity of Ghana

20th June, 2008

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Outline

Background Social & Econ. Policies affecting Competition Nature of the Mkt / Competition Anti-Competitive Practices Consumer Protection Scenario Conclusion

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Background: Ghana facts

Population: 22.5 million (2006) Population Growth Rate: 1.9% (2006) Population Structure: 39% of the population below 15 years

GDP: $14.89 billion (2007) Real GDP growth rate: 6.2% (2007) Economic structure:

Agriculture: 39% of GDP (55% of the labour force) Services: 33% of GDP (30% of the labour force) Industry: 28% of GDP (15% of the labour force)

Major sources of foreign exchange: gold, cocoa exports & remittances

Aid: $1.316 billion (2007) (very important to economy)

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Background: Ghana facts (cont.)

Debt Relief: Heavily Indebted Poor Country (HIPC) program (2002) Multilateral Debt Relief Initiative (MRDI) (2006)

Important development challenges: low productivity high costs of and difficult access to financing underdeveloped transport infrastructure unclear land ownership frequent power and water cuts a low skilled labour force

Poverty: 28.5% of the population below the poverty line (2007) Overall poverty rates steadily falling in recent years Poverty levels in rural areas, among women and in the three northern

regions remain much higher than the average

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Development Policy Structural Adjustment Programme (SAP)

characterised by devaluation, fiscal austerity, tight money and liberalization policies

mixed impact on the agricultural sector Increased availability of capital goods and inputs such as fertilizer Weakened food sub-sector due to preference for cash crops

varied impact on the industrial sector Investment incentives favoured export industries over the formerly

protected manufacturing industries Negative impact on domestic manufacturing due to astronomical

increase in cost of capital goods

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Development Policy (cont.)

Poverty Reduction Strategy Paper (PRSP): GPRS I & II

The overarching aim of Ghana’s current socio-economic development agenda is the attainment of middle income status (with a per capita income of at least US$1000) by the year 2015 within a decentralized democratic environment

Ghana’s current focus is: continued macroeconomic stability; accelerated private

sector-led growth; vigorous human resource development; and good governance and civic responsibility

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Agricultural Development Strategy

Agricultural contribution to economic activity

sector still remains the largest contributor to GDP

In 2006, sector contributed 39.3% of GDP and 41.1% of foreign exchange earnings

The country’s current development strategy (GPRS II) puts agriculture centre-stage; with the country aiming to adopt an agriculture-led growth strategy

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Industrial Policy GPRS II has a number of broad policy objectives targeting the

industrial sector.

The most direct policy measure is to increase the output and improve the competitiveness of domestic industrial products.

This would involve among others the ff: promotion of efficient management practices in production systems;

encouraging the use of local products and services in government procurement;

actively promoting made in Ghana products within domestic and international markets;

ensuring the removal of technical barriers in the way of key current and potential export products; and

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Trade Policy

WTO issues Ghana is an original Member of the WTO has signed the Fourth and Fifth Protocols to the GATS not party to the Information Technology Agreement or

any of the plurilateral agreements concluded under the WTO

Economic Partnership Agreements (EPAs) Ghana signed an interim trade deal with the EC in

mid-December 2007 as a stepping stone to safeguard exports to the EC

controversial issues such as trade in services or measures to strengthen competitiveness are to be negotiated in a second stage in 2008

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Privatisation & Regulatory Reforms

Government controlled more than 350 SOEs in the mid 1980s

By end of 2000 nearly 300 had been privatized with 18 more divested by end of 2003.

Attention has been drawn to the importance of the private sector in boosting economic growth

Hence, the development of a National Medium term Private Sector Development Strategy (2004 – 2008)

Key targets: to create a favourable investment climate in Ghana

Between 2005 and 2006, Ghana ranked 9th across 175 economies for improvements that eased the terms of doing business

Still many bottlenecks in terms of regulatory reform and the enforcement of these regulations once they are passed as laws

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Investment Policy Ghana has a comprehensive investment law, the Ghana Investment

Promotion Centre Act, 1994 (Act 478) which establishes the Ghana Investment Promotion Centre (GIPC)

GIPC’s main functions include initiating and supporting measures that will enhance the investment climate in the country for Ghanaian and non-Ghanaian companies

In 2006, India, China, Britain, Lebanon, USA and Germany were Ghana’s major sources of FDI

Nigeria and South Africa remain the leading African investors in Ghana

New tourism Law (Legislative Instrument 1817) which grants generous incentives to investors in the tourism and hospitality sub-sector has had a positive impact

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Government Procurement Policy

The Public Procurement Act 2003 (Act 663) essentially provides a framework for developing and strengthening procurement institutions and streamlining their operational processes.

It is hoped that the passing of the Public Procurement Act and establishment of a Public Procurement Authority will make the procurement process transparent and free of corruption.

Currently, there is no single code for the government procurement process; it varies from time to time. However, a unified code is under preparation.

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Labour Policy

Labour regulations and policies are generally favourable to business and labour-management relations are fairly good.

A revised Labour law (Act 651) passed in 2003 became effective in March 2004. The new law modified the old labour laws to bring them into conformity with the core principles of the International Labour Convention, to which Ghana is a signatory.

A National Labour Commission has been established to resolve labour and industrial disputes.

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Consumer Protection policy

Currently, Ghana lacks a comprehensive consumer protection law

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Nature of the Market/Competition Market structure

Ghana has many more small firms than large firms. Approximately 70 percent of the firms are termed as ‘micro’; employing less than 5 people

Most of these small businesses are operated in the

informal sector under very little regulation

Most often these businesses are not registered or do not have access to any property that can be used as collateral.

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Nature of Competition

Previously, many of the firms in Ghana had limited exposure to competition due to their domestic orientation.

In recent times however, the influx of cheaper food and textile imports from China has created a lot of competition in the market.

Some production plants have closed down because of their inability to cut production costs to enable them stay in the markets.

Local manufacturers contend that the country’s tariff structure places local producers at a competitive disadvantage compared to imports from other countries.

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Competition Act

The Government is in the process of developing a bill on competition law as a means of removing anticompetitive practices in the economy to ensure efficiency in the production system.

The main source of legal authority to protect consumers of goods and services was the issuance of the “Protection Against Unfair Competition Act, 2000” (Act 589) which is currently administered by the Minister for Justice.

Act 589 covered mostly misleading acts, discrediting acts and violation of trade secrets

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Competition Enforcement

The current Act does not support the regulation of the general competition environment in Ghana

There is the need for an autonomous body to perform the task.

This was recognised by the Government, hence the drafting of the Trade Practices Bill of 1993, which was later incorporated into the Competition and Fair Trade Practices Bill of 2000, which still has to be developed into an Act.

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Competition Agency

The Consumer Protection Agency (CPA), a non governmental organization, was recently formed with the aim of helping to protect the rights of consumers

The CPA is meant to complement the work of the Food and Drugs Board (FDB)

FDB is the main institution in Ghana constitutionally mandated to ensure that consumers are provided with the right quality and standard of products and services.

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Anti-competitive practices

Very little documentation on anti-competitive practices

Recently, the Trade Ministry, following unfair trade practices associated with the importation of tomato paste and concentrate into the country, took anti-dumping actions by temporarily banning the importation of the products into the country.

This came after a news publication report on the negative effects that under-invoicing of tomato paste and concentrate into the country was having on the economy and local producers of such products.

The unfair trade situation in the industry has forced the sole local tomato processing company in the country, which buys its raw material from the resuscitated tomato factory in the northern region, to threaten a drastic cut down on its demand from the factory.

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Consumer Protection Scenario

Consumer Protection Law There is no centralized consumer protection law or policy in

Ghana. Currently, a group of public institutions are mandated to oversee

specific aspects of consumer protection.

These institutions included: Ghana Standards Board (GSB), the Food and Drugs Board (FDB),

the Public Utilities Regulatory Commission (PURC), the National Communications Authority (NCA) and the Environmental Protection Agency (EPA).

Recently formed Consumer Protection Agency (CPA) hailed as a unique opportunity for Ghanaians to effectively channel complaints about goods and services they purchase.

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Conclusion Ghana’s recent encouraging economic performance makes

enacting a competition policy timely.

There is the need for the establishment of an authority solely mandated to assess the extent of anti-competitive behaviour and inappropriate regulation in particular sectors.

There is also the need to build capacity to implement and enforce competition rules. 

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Thank you