Competition and Consumer Protection Priorities for Regional Integration in Africa
16 June 2020
Africa’s deepening integration through AfCFTA goes beyond free trade. AfCFTA also aims for a unified competitive market which can face the world market together, laying the ground for a customs union and the eventual free movement of persons. Negotiations on competition are meant to begin in Phase II, along with investment and intellectual property. Consumer protection may follow suit.
But for the moment, at least COVID-19 pandemic is hitting Africa hard. UNCTAD predicts a drastic drop in global FDI flows by up to -40% during 2020-21, reaching the lowest level in 20 years, compounded by recession, falling trade, collapsing demand for raw material exports, and threats to food security.
Competition and consumer protection authorities in Africa responded fast to the COVID-19 crisis. Governments swiftly adopted emergency measures to protect consumers from misleading, unfair and abusive practices. 20+ countries reported action against price gouging and hoarding of essential consumer products, such as facemasks, hand sanitizers and basic household products. Some countries set price caps for basic consumer goods, incl. personal hygiene and cleaning items. Consumer protection agencies enforced action against scams and false claims, especially against miracle products sold online. In order to protect vulnerable and disadvantaged consumers, Kenya’s Stanbic Bank granted a three-month loan repayment holiday for consumers. UNCTAD also issued calls for action recommending 1) Governments defend competition in the markets during the COVID-19 crisis and 2) take firmer action to better protect consumers and for airlines to respect consumers rights in the midst of the crisis.
Competition and consumer protection are essential to regional integration in Africa post-Covid-19:
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Increased market concentration is expected in the wake of the pandemic. Dominant firms, esp. online platforms will become more dominant. An increase in mergers and acquisitions (M&A) activity is also expected due to the number of smaller firms and startups hit by the lockdown measures.
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Cartel activities are also likely to increase during the crisis as public procurement for essential health related goods and services are heightened, presenting to temptation for bid-rigging and collusive tendering.
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Consumers rights will also need strengthened protection as the crisis evolves from health to economic emergency. Consumer protection must adapt from fighting hoarding and price gouging to ensuring consumers right to refund, revising personal insolvency mechanisms and allowing relief measures such as debt renegotiation or utility bills suspension.
There are many regional success cases to be emulated continent-wide such as - South Africa’s success fighting anti-competitive behavior in wheat, bread, maize, poultry, pharma and cement markets lead to lower prices for consumers and more vibrant competition in markets. Zambia broke a powerful car‐towing cartel, also addressing a corruption problem. Kenya made Safaricom drop exclusivity clauses, remedying abuses of a dominant player.
UNCTAD can play in the implementation of the AfCFTA, as the focal point within the United Nations System on the issues of competition and consumer protection and the custodian of the only multilaterally agreed instruments on competition and consumer protection: the UN Set of Principles and rules on Competition and the United Nations Guidelines for Consumer Protection. UNCTAD provides the largest and the most inclusive intergovernmental forum for dialogue and exchange of experiences and would be a valuable partner to the AfCFTA Secretariat in competition and consumer protection, trade in goods and services, ecommerce among other areas. UNCTAD hosts an intergovernmental meeting on both areas every year and this year we are organizing our five-year UN Conference to Review the UN Set on Competition, which has been rescheduled and now will be held from 19 to 23 October 2020, in Geneva.
