There are growing worries that even though the East African bloc continues to integrate, the rise of anti-competitive trade habits is bound to make it difficult for other companies to join the region. Some countries within the region continue to grapple with coming up with strong competition laws as they try to strike a balance between protecting their indigenous firms and attracting foreign companies.
Ms Tania Begazo, a senior economist, Competition Policy Cluster, Trade and Competitiveness, World Bank Group, argues that opening markets and removing anticompetitive sectoral regulation will safeguard and encourage competition in the East African Community.
“Competition is an ingredient for economic growth. You can’t attract investment if you are not competitive. Tackle cartel agreements that raise the cost of key inputs and final products, and prevent anticompetitive mergers,” she said. She was speaking at the EACOMP regional advocacy workshop organised by CUTS Nairobi with support from TradeMark Africa (TMA) in Arusha recently.
As competition deepens, anticompetitive practices such as predatory pricing – where large firms with strong financial muscle collude to sell their goods or services below the cost of production – could make it difficult for other companies to enter the market.
In his analytical report, Should EAC Regulate Competition?, Alloys Mutabingwa, the former EAC deputy secretary General, argued that countries needed to create a free and fair environment that promoted competition.
“Whereas competition among firms is a precursor to economic development, a competition culture that is characterized by high levels of cartelization, heavy-handed government intervention, overregulation, high barriers of entry for SMEs, and monopolies abusing their positions of dominance are counterproductive forms of competition,” Mutabingwa advised.
To avert these shocks, the EAC Competition Policy (EACOMP) was set up to regulate competition and ensure that firms do not abuse their powers.  The EACOMP project of CUTS is being undertaken with funding from TMA. The project focuses on Kenya, Uganda, Tanzania, Burundi and Rwanda.
In 2006, the heads of state assented to the EAC Competition Act. The regional competition policy and law aims at ensuring wider consumer choice in markets for goods and services. The Act also endeavours to stimulate effective price competition between suppliers, and deter anticompetitive behaviour within the EAC.
Enforcing the act has been slow, however. Only Tanzania and Kenya have fully-fledged competition regulatory and institutional frameworks with some experience on competition enforcement. Rwanda and Burundi recently enacted their competition laws and are in the process of establishing the required institutions.
Despite starting the process of enforcing competition rules before the rest of the EAC partner states, Uganda does not have one and is yet to adopt a competition law. An official from Uganda’s ministry of trade said lack of priorities is affecting the implementation of the law.
“The ministry doesn’t have a mechanism of prioritising key issues to be implemented. It has no clear mandates,” the official, who declined to be named, said. Trade and policy experts say that the lack of a law will render Uganda uncompetitive and consumers could be exploited through higher charges of goods and services.
Clement Onyango, the director, CUTS Nairobi, says policy implementation remains a challenge. Onyango said declarations are made but the time between declaration and implementation remains an uphill task.
Mutabingwa, in his report, said that in order to ensure effective implementation of the EAC Competition Act, it would be important to garner sufficient political will at the highest levels in order to expedite the establishment of the EAC Competition Authority.
Wangome Kariuki, the director general, Competition Authority of Kenya, says they have made progress in the creation of transparency and predictability by developing guidelines and regulations for the players. The authority, he said, also deterred the outdoor advertising association from fixing prices of billboards.
Kariuki, however, blamed political influence in the enactment of the competition law. “Political interests are all over. If you touch or disturb a company that voted for so and so…it becomes an issue. But as a regulator, you have to know how to deal with such scenarios,” he said.
Source: The Observer

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