Capacity Building on Competition Policy in Select Countries of
Eastern and Southern Africa

7Up3 Project


 

 

7Update EnewsLetter Vol. IV


News from project countries………

BOTSWANA

Dangers from Poisonous Toys
Certain children’s toys have been reportedly found to contain highly poisonous substances that can cause death. South African media reports confirm that these toys contain large quantities of a toxic lead pigment. A long exposure to toxic substances like lead can cause loss of appetite, stomach discomfort, insomnia, retardation of mental and physical development, kidney and brain damage and eventually, death.

An official at the Department of Consumer Affairs in Botswana was surprised to hear the news. She however said that, it is easy for certain deleterious products to enter the country because the Botswana Bureau of Standards (BOBS) is yet to build testing laboratories at its borders. She regretted that her department is unable to detect the products and take up appropriate remedial measures.

BOBS’ senior standards officer, Obonye Lopang was equally surprised to hear about the toys, and admitted that they did not have standards for such goods. , They are, thus, unable of action, if a complaint is brought to their attention.

He further added that BOBS’ mandate is to test products to ascertain if they met the required standards. For compulsory standards, Lopang said, BOBS tests the products for compliance with health and safety and protection of environment.

The reports about poisonous toys comes barely six months after the Sudan Red food colourant was found in Robertsons Spices, which were recalled from the shelves. The company involved, later apologised for the problem.

(Source: Mmegi Newspaper, 27.10.05)

Domestic Gas Users Still Unhappy
Consumers in and around the capital Gaborone have been accusing domestic gas dealers of foul play, in that they continue to sell half-empty cylinders. Trade and Consumers Affairs Director Maotlhodi Moatlhodi reported receiving some 77 complaints from domestic users who stated that their cylinders were not full to the brim. He added that they have so far resolved 69 cases, while the remaining eight are pending.

Moatlhodi has said that the cases are so complicated, that the Consumer Protection Office has to seek technical assistance from organisations like the Botswana Bureau of Standards and Energy Affairs Division to be able to affirm a sound conclusion.

He added that most of these cases are resolved by mutual agreement, citing a few examples where dealers resolve complaints by giving the client another gas cylinder, or by refunding the complainant.

While most customer complaints are genuine, gas dealers contest some, saying that an improper handling and use of unsuitable regulators lead to gas leakage. The users, who then blame the LPG dealer for supplying half-full cylinders, do not detect such wastages.

(Source: Botswana Press Agency, 31.10.05)

Privatisation the Catalyst
Privatisation will improve efficiency in service delivery, promote competition and increase productivity, according to Assistant Finance and Development Planning Minister. Duncan Mlazie, who was speaking at a conference on privatisation, organised recently, by the Public Enterprise Evaluation and Privatisation Agency (PEEPA).

Duncan Mlazie elaborated on a few salient points during the course of his speech. Among the points stressed were that privatisation would create further opportunities for the development and growth of the small enterprise sector, and it would also raise the country’s growth potential by securing stronger flows of foreign direct investment and technology transfers.

There was also the need to safeguard public interest for the achievement of goals. The need would be ensured by undertaking measures to screen those who could be affected upon negatively, either by job losses or high prices.. Mlaize further stated that privatisation in Botswana might be viewed as a shift towards a greater market orientation of the economic policy, in contrast to the past, when the government played a dominant role.

Mlazie added that the Government desires to move away increasingly from owning and operating productive activities to focussing on playing a coordinating and facilitating role. The challenge, therefore, would be to balance the respective strengths and limitations of the government to yield maximum benefits.

The Assistant Minister opined that innovations by facilitating private sector participation in the provision of public services has become a necessity now, more than ever before, given the challenge facing the Government in the allocation of declining revenues among competing needs. Private sector competence in financing and executing some of the projects will go a long way towards alleviating the Government’s funding and implementation capacity constraints. .

He commended the local authorities for leading the way in involving the private sector in providing certain public services, through outsourcing. The Government, he said, is fully committed to the privatisation process, adding that, PEEPA was all set to implement the privatisation policy.

Consequently, the Government has approved the Privatisation Master Plan, which, as a strategy document, provides the principles and practices to be followed in implementing privatisation transactions. It also identifies the regulatory and institutional changes required for successful implementation of the privatisation drive.

(Botswana Press Agency, 01.11.05)

ETHIOPIA

Tight State Control over Advertising
The fledgling free enterprise system in Ethiopia has brought about the emergence of a few advertising companies that are currently flooding, radio and television stations, particularly those that are state-owned. Although private businesses have come into being in the last 14 or 15 years, private advertising companies have not shown a parallel growth. The few advertising agencies are concentrated around the state-owned media and the few private newspapers.

The Government and/or ruling party owned media outlets are obviously making a lot of money out of the advertising arrangements or contracts they have signed with the few advertising agencies, run mostly by individuals who have achieved some prominence either as journalists or as performers in state-run theatres.

Like the electronics media sector, the state or the ruling party owned media companies still control tightly, the advertising business in tandem with their close associates be they individuals or agencies. The businesses of electronics and advertising are still closed areas, even after fifteen years of the adoption of free enterprise as the guiding principle of the Ethiopian economy. Critics of the ownership model of the electronics media in Ethiopia, often argue by saying that the state and the ruling party are reluctant to relinquish control of these institutions, for both economic and political reasons.

No reliable data can be obtained from the agencies. Rough estimates are that they make millions in annual revenue from the advertising business. This is apparently the main reason why they stick to their monopolistic privileges, instead of diversifying ownership in the sector.

The other reason for the tight control of these institutions by the ruling party is political. The authorities might sometimes consider liberalising the electronics media as being tantamount to permitting subversive ideas to find their way into society, particularly during elections. That would also threaten their monopolistic privileges. This may be disputable, but the records of at least the last 10 years demonstrate the unwillingness of the Government to either end its monopoly or to invite private competitors into this particular sector.

The absence of competition and the near monopolistic nature of the business have turned what might have become a potentially lucrative sector into a colourless and staid performance, depriving it of variety in presentation, content or participation.

If the advertising business is to come out of its cocoon of drab monotony, the state or the concerned authorities should actively initiate liberalising the same, together with the electronics media. It goes without saying that such a move is long overdue. More diversity should be allowed in content and presentation, and graduates from the few ‘advertising schools’ should be given equal opportunity to prove themselves in competition with the more established advertisers, thereby ending the quasi-monopolistic nature of the business.

The state or the party in power should activate such a process – given that they are the largest advertisers. Concurrently, they directly or indirectly control the advertising business and its revenue.

(Addis Fortune, 06.11.05)

India-Ethiopia Private Sectors Come Together
A variety of Indian companies, consultants and professionals are currently operating in Ethiopia. According to the Indian Embassy, over 150 Indian companies have obtained approvals for investment projects and joint ventures in Ethiopia from the Ethiopian Investment Commission.

Under the leadership of the recently appointed Ambassador Gurjit Singh, the Indian Embassy has launched an India Business Forum (IBF), which brings together Indian companies and the Ethiopian private sector. The embassy would subsequently, engage this group of Indian professionals and businessmen with appropriate Ethiopian companies, authorities and institutions to develop this India-Ethiopia partnership into more diverse areas.

The embassy noted that India is a growing partner of Ethiopia in the economic field, and that, it is particularly keen to mobilise private sector investment and partnerships with the latter. From the public sector too, India is participating fully in the achievement of Ethiopia's developmental goals. The embassy believes that with closer coordination, a greater partnership between the two countries is possible.

(The Reporter, 29.10.05)

Quality Coffee from South Soon
Southern coffee growers have pledged better quality coffee from the forthcoming production period. At the end of a capacity building workshop, growers representing 69 cooperatives of coffee processing industries submitted that they had not paid enough attention to the quality of their produce, and assured much better quality in the future.

They admitted that their quality had suffered on account of their efforts to stay in the competition with individual coffee traders. The quality of their coffee, and consequentially, their earnings had been affected due to the mixture of green coffee beans with the coffee they had supplied earlier.

The capacity building exercise, they admitted, had helped them become conscious of the various ways of improving the quality of their coffee, and how best to benefit by competing with other players in the market. The government, especially the Cooperative Bureau from various States, have also come forward with easy borrowing strategies to help the farmers. Over 500 farmers and representatives from coffee processing industries participated in the workshop.

(Ethiopian Herald, 11.09.05)

MALAWI

Foreigners Operating Illegal Businesses
Malawi’s Minister of Trade, Martin Kansichi, has admitted that the system of issuing business licenses is flawed in Malawi. He said his Ministry is intent on confiscating illegal licenses.

Refugees from war-torn areas, as well as foreigners from Nigeria, Tanzania, Zambia and various Asian countries, have escalated the problem in the country by indulging in illegal businesses, taking advantage of the loopholes in the licensing procedure. This issue has also been raised by civil society organisations like the Malawi Economic Justice Network (MEJN), as reported by its Acting Coordinator Mabvuto Bamusi, who asserts that many of these illegal businesses are “hiding behind locals in various business ventures”.

Bamusi acknowledges that the Government has on several occasions, given priority to foreign companies at the expense of locals, saying that locals lack capacity. However, he stressed that the Government should recognise that the capacity of local companies must be strengthened, if the country is to develop.

The Government has another problem to deal with. Foreign exchange bureau operators are accusing the Reserve Bank of Malawi of ignoring the shortage of forex that is affecting bureaus and commercial banks.

(The Malawi Nation, 10.10.05)

Ease in Movement of Products
Acting Director of Trade in Malawi, Harrison Mandindi, has announced a bilateral agreement with Mozambique, which would permit the duty-free passage of products to the country. The forthcoming agreement, Mandindi said, would exempt a list of ‘sensitive’ products from the duty-free status. ‘Normal’ duty is to be charged on products like granulated sugar, beer, firearms and ammunition.

Mozambique would continue to charge duty on some Malawian products such as refined edible oil and beverages like Coca-Cola, while Malawi will charge duty on raw and manufactured tobacco, stationery and petroleum products.

The bilateral trade agreement with Mozambique has been in response to demands by Malawi’s private sector, which says high duty rates in Mozambique discourage trade between the countries. The two most vocal groups have been the Trade Policy National Working Group (TPNWG), and the Malawi Confederation of Chambers of Commerce and Industry (MCCCI).

Simon Itaye, TPNWG chairperson, says the bilateral agreement will encourage exports. MCCCI Chief Executive, Chancellor Kaferapanjira, said there are new opportunities in Mozambique for Malawian producers because basic commodities are in great demand in areas, which are closer to Malawi than they are to Maputo. He urged, that the agreement be signed without delay.

(The Malawi Nation, 24.10.05)

Tea Growers Learn from Kenya
It is being said that Malawi’s tea growers are failing to take advantage of the low cost of production to develop the industry. Smallholder tea officials visited Kenya recently, where they discovered that they could upgrade current performances given that; tea production costs are cheaper in Malawi than in Kenya. Smallholder Tea Development Committee Chairman Armstrong Khoza confirmed that on an average, tea production in Kenya costs about three times more, (in terms of cost per person per day), as compared to Malawi.

The officials learnt that Kenya’s tea sector has developed greatly, despite, facing problems of leaf collection, rising demands on processing factory capacity and high labour costs.

Malawi ranks second after Kenya as the largest producer and exporter of tea in Africa, and is listed twelfth globally. Khoza said, Kenyan tea farmers have benefited from the partnerships existing between them and the private tea companies. Therefore: “This partnership has enabled the smallholder sector to produce some 70 percent of all Kenya’s 250 million kg of good quality tea per year, making Kenya the biggest tea producer in Africa”.

“The partnership has introduced favourable competition and established strong, sound, efficient and transparent smallholder organisation structures”, added Khoza.

Malawian tea growers have demanded support from tea stakeholders and the Government, to help them expand and improve production. They also recommend that privatisation and joint venture programmes would also benefit the smallholder.

Tea is Malawi’s second foreign exchange earner after tobacco. It accounts for close to nine percent of the country’s exports. The industry currently facing a big challenge from poor rains, which has considerably slowed down the growth of bushes.

(The Malawi Nation, 11.08.05)

MAURITIUS

The Milk of Contention
The decision to reduce profit margins on milk from a maximum of 41 percent to 14 percent should make consumers happy, while giving a hard time to importers.

The Minister of Commerce and Industry is firm: the profit margin has so far been excessive. The Cabinet has made the decision in the light of a study by the Ministry. “The decision has been made not to fix the selling price of powder milk, but to guarantee to all parties concerned, a profitability based on a system of maximum mark-up”. This decrease in the profit margin could lead to a drop in the price of milk to Rs 22 per kg.

Many consumers have been surprised by the regular increases in the price of milk during the past months. What made it even more astonishing was that this product is exempt from import customs taxes, and therefore, its price in the market should not be rising, constantly.

Importers, who have often been accused of artificially inflating prices, attribute the price rise in the local market to the constant appreciation in the price of milk in Australia and New Zealand.

The above decrease in the profit margin could however lead to situation of monopoly. Small firms that control 15 percent of the market could disappear, while the two major companies – New Zealand Milk with Anchor and Red Cow (60 percent) and Happy World Foods with Twin Cows (25 percent) would then control the whole sector.

India could perhaps be the solution. The country is known for quality and tasty dairy products, which should cost less than those from Australia or New Zealand. The State Trading Corporation is already taking steps to import milk and milk products from India, amid rumours that these products may not be competitively priced.

(L’Express, 09.08.05)

Consumer Policy Being Readied
The Ministry of Justice and Human Rights is planning to host a National Forum, to elaborate on a National Consumer Protection Policy for Mauritius. The Forum would be hosted, jointly with the Ministries of Commerce and Consumer Protection. The Minister of Justice and Human Rights, Rama Valayden has conveyed this decision to representatives of various stakeholder groups including the consumer organisations in the country.

Consumer organisations, like ACIM and ICP, are expected to play a major role in these consultations. It should be noted that, Mauritius is one of the few African countries disposing of a Consumer Protection Act. However, this is the first time that the Government wishes to consult all stakeholders in view of elaborating a Consumer Protection Policy.

Consumer organisations have welcomed this initiative. ICP spokesperson, Mosadeq Sahebdin recalls that a Consumer Protection Law forms an integral part of a Consumer Protection Policy, without which, the law may not be effective. He further observes that, consumer organisations have called on stakeholders to reflect on the need to align the Consumer Protection Policy along the UN Guidelines on Consumer Protection. ICP believes that, in the interest of the country’s consumers, the Consumer Protection Policy should not be dissociated from the Competition Policy in Mauritius.

(News on Sunday, 4-10 November 2005)

Regulating Electrical Houseware
With a view to regulating the import and quality of Residual Current Devices (RCD) in the local market, the Government has agreed to include these devices in the list of controlled products under the Supplies and Control Act. A residual current device is a circuit breaker. It operates to disconnect the circuit, whenever current leakage exceeds safety limits. The Government is also set to adopt the British Standard and that of the International Electro-technical Commission, in order to ensure the quality of these devises.

The Government has also decided to postpone the coming into operation of the Electricity (Safety of Low-Voltage and Medium Electrical Installations) Regulations 2004 in respect of existing customers, so as to give more time for compliant devices to be imported and for the public to be sensitised to the need to install the RCD.

(News on Sunday, 4-10 November 2005)

MOZAMBIQUE

The Price of Sugar
The country’s breweries and soft drink makers are continuing to import sugar, rather than buy the produce, grown and manufactured locally. Such is the statement of Arnaldo Ribeiro, the Director of the National Sugar Institute (INA) of Mozambique.

Since the start of 2005, some 56,000 tonnes of both white and brown Mozambican sugar have been sold in the domestic market, an eight per cent decline from the same period in 2004. Industries have purchased only 8.6 percent of the sugar sold domestically. The major sugar-using industries are the breweries and the soft drink makers, dominated in Mozambique by Cervejas de Mocambique (CDM, or Beers of Mozambique), which is a subsidiary of South African Breweries, and the local branch of Coca-Cola Bottling Company.

Ribeiro has said that the industries are dissatisfied with the price charged by Mozambican sugar producers. They have not abandoned Mozambican sugar entirely – but at the same time, are continuing to import from South Africa.

This could be regarded as economically irrational: imported sugar bears surtax, in order to protect the national product. So, South African sugar costs the industries more than Mozambican sugar. But CDM and Coca-Cola seem willing to pay that extra, as part of their pressure to force Mozambican sugar companies to lower their prices, according to observers. Failure to reach a consensus on the price means that the local industry is prejudiced, since it can sell less in the domestic market.

(Panapress, 29.07.05)

Cashew Crushed to its Death
At its Independence in 1975, Mozambique was the world's leading cashew producer, and processed cashew kernels were the country's most important export. But by the end of the war in 1992, production had tumbled, the national cashew orchard had a high proportion of old or diseased trees, and state-owned processing plants badly needed new investment.

So the state cashew company was broken up and sold off in 1994-95. Mozambican companies bought the processing plants on the assumption that the industry would continue to enjoy government protection from foreign competition.

But in late 1995, as a condition for over US$ 400 million in loans, the World Bank (WB) demanded the liberalisation of the raw cashew trade. This meant reducing the export surtax on raw nuts – the industry, the traders in raw nuts, and the Government agreed on 26 percent surtax, designed to encourage domestic processing. Under WB pressure, the surtax came down to 20 and then to 14 percent – a level, which the cashew industry described as ‘ruinous’, making it impossible to compete with traders selling raw nuts to India.

By late 1998, the industry was fighting for its life. Ten of the 15 sizeable processing factories had closed, with over 5,000 workers laid off. The reason for the crisis was summarised by Mr. Kekobad Patel, Chairman of the Cashew Industry Association. “There is currently a processing potential for 50-60,000 tonnes of nuts”, he said, “but only 40,000 tonnes are being marketed and half of those are exported”.

The World Bank argued repeatedly that liberalisation would improve the prices paid to farmers for their nuts. However, an independent study by the international consultancy firm Deloitte and Touche, commissioned by the Ministry of Industry, Trade and Tourism and funded by the World Bank, found that the benefits of liberalisation mainly went to the traders, not the farmers. It rejected as inaccurate, WB claims that the industry was so inefficient, that Mozambique would earn more money by exporting raw nuts rather than processed kernels. On the contrary, the Deloitte study found that, on average, Mozambique would gain an extra US$150 per tonne by exporting processed nuts.

Parliamentary members of the ruling Frelimo Party reacted to the WB pressure by calling for a total ban on the export of raw nuts for the next 10 years, a proposal backed by the remnants of the processing industry. In September 1999, parliament passed a compromise bill raising the surtax to 18-22 percent, with the exact level to be determined each year, based on prevailing conditions. World Bank officials were reported to have tacitly agreed to the compromise.

(Africa Recovery, 05.11.05)

Illegal Fishing Wreaks Havoc
A Chinese fishing boat was seized in Maputo port, after it was found to be carrying an illegal catch of about four tonnes of shark and tuna.

The catch was uncovered when the ship, already on its return journey to China, suffered engine problems, and was forced to turn around and moor in Maputo. The Mozambican authorities suspect that the amount of fish this boat took illegally from their waters was much more than the four tonnes. There are indications that much of the catch was transferred to another vessel on the high seas. No exact estimate has yet been made of the value of the fish seized, the only thing being known is, that it is worth ‘many thousands of US dollars’.

A technical team of the Mozambican Fisheries Ministry, the Confederation of Business Associations (CTA), and the ‘Olhando o Horizonte’ (Watching the Horizon) project that helps monitor the movement of boats in Mozambican waters reports that there are always 100-120 boats illegally fishing in the country's waters. Most of these boats are Chinese. They noted that these illegal activities might seriously prejudice the country's fishing and tourism industries within the next five to 10 years, since they are destroying several protected species, like the white shark, the hammerhead shark, and marine turtles.

“We know that this type of fishing is destroying our country's marine riches. And one of the biggest tourist, ecological and economic resources of our country is in the sea and in the species that these pirates exploit, disregarding every rule. If we just sit idly by, watching this situation we will have nothing in our sea within the next few years”, said a spokesman for the joint team.

(Agencia de Informacao de Mocambique, 27.10.05)

NAMIBIA

Need for Regional Competition Policy
Speaking at a presentation in Windhoek on competition policy in Namibia, Rehabeam Shilimela of the Namibian Economic Policy and Research Unit (NEPRU) said the Southern African Customs Union (SACU) should seriously consider setting up a competition policy.

The NEPRU researcher said, unfair trade practices were a cause for concern. Echoing Shilimela's sentiments was Nepru Director, Dirk Hansohm. Hansohm said, domestic policies and laws were good enough in articulating local issues, but were ineffective in dealing with cross-border trade practices. He urged countries within the SACU group to implement a regional competition policy, saying it would go a long way towards protecting emerging entities threatened by unfair practices.

Accordingly: “There is a need for regional collaboration in fighting unregulated competition which is threatening the survival of small economies”. South African conglomerates, dominant in southern Africa, have often come under fire for unfair competition and circumventing cross-border laws.

For instance, Swaziland had to lodge a complaint with SACU and later South Africa, over unfair trade practices threatening the tiny kingdom's fertiliser industry. Huge South African fertiliser entities are allegedly engaged in under-pricing, totally pushing out Swazi companies from the domestic market. The complaint was not resolved, however, as there was no mechanism to deal with it on an international basis. Hennie Fourie, Chief Executive Officer of the Namibian Manufacturers Association (NMA), said Namibian manufacturers were often the victims of unfair trade practices by South African companies.

Fourie added, as long as there was no regional approach, local manufacturers would face reduced business and, in some cases, closure. The seminar examined ways of enhancing and developing competitive markets in eastern and southern African countries.

(All Africa, 17.08.05; http://allafrica.com/stories/200508170124.html)

Competition Act to Serve Business Interests
Unfair competition appears to be a thorn in the flesh here, for many upcoming and even established indigenous enterprises that are being muscled out of business. As a result, the Ministry of Trade and Industry is being urged to speed up the implementation of the Competition Act and other relevant pieces of legislation that would protect local traders from foreigners.

It is believed that the enactment of such legislation, would also help to curb what some people referred to as the ‘reckless plundering’ of the local economy through unfair competition, as well as the present free-for-all situation.

It appears the local business people have started feeling the pinch of the adverse effect of globalisation that is endangering indigenous businessmen and women. During a recent meeting attended by Small and Medium Entrepreneurs (SMEs), representatives of trade unions and financial institutions from various regions, concerns were raised about big foreign companies pushing the locals out of the market through alleged unfair competition. They felt this state of affairs could continue for a long time to come, if nothing is done to rectify the worrisome situation.

Business tycoon Dr Franz Aupa Indongo was among the many to address the meeting, where it emerged that the clash of interests between the local and foreign entrepreneurs is has reached boiling point. Those singled out for hawkish trading practices were mainly business people from China and India, who are apparently shrewd exploiters, unfair competitors and violators of labour laws.

Local traders seem to have realised the constitutional guarantee of a free market system in Namibia, is being abused by well-to- do foreign companies to force the local struggling business people out from the scene. As a result, the affected local people are thinking of establishing a body through which they would lobby the Namibia Chamber of Commerce and Industry (NCCI) and the Government, in order to help rectify the situation.

“I cannot understand the need and usefulness of a Chinese or Indian trader having a small retail shop in a shanty town where he/she is representing a Government company of his country and you call that a good free market system or fair competition. How can an individual member of the community compete against a factory/company owner from China, India or South Africa selling the same basic commodities next to him/her?”, one participant queried at the meeting. “Where have you seen a school built by foreign companies, who are dominating the local business environment here? Most of their money is repatriated to their respective countries while the country is left poor”, complained another participant.

There is a growing feeling that most of the so-called investors are only using Namibia as a cash cow, but they do not have the interests of the country at heart.

(New Era News, 25.10.05)

Business Forum on the Anvil
Namibia’s Ministry of Trade and Industry has signed agreements with the Namibia Chamber of Commerce and Industry (NCCI), the Namibia Manufacturing Association (NMA) and the Indigenous Business Forum, for the purpose of launching a national forum.

Immanuel Ngatjizeko, the Minister of Trade and Industry, elucidated that the forum would serve as a platform where the government and the different stakeholders could discuss their concerns.

He said the forum will comprise of, “major public and private institutions and companies, will be of a consultative and advisory nature, and will meet every two months to deliberate on trade measures, regulations, reviewing of investment agreements, product and market development issues and any other major concerns to Namibia's economic development”.

Concerns have arisen that the Government has not put in place the right mix of interventions to support businesses, particularly new ones. Also, Namibia's negotiating positions have been dominated by the central government without consultations with labour, the private sector, and civil society.

Vice president of the NCCI, Andre Neethling, welcomed the forum as an aid to identifying opportunities and urged firms to search for potentially profitable areas where, Namibia could compete at an international level.

President of the Indigenous Business Forum, John Endjala, hoped that the forum would empower those, previously disadvantaged. The Minister said Namibian businesses should not view foreign investors as a threat, but should seek strategic partnerships with them to increase productivity, and evolve a more ‘level playing field’.

(New Era, 03.11.05)

UGANDA

Facelift for the Coffee Sector
The Warehouse Receipt System (WRS) is a project designed to halt the decline in coffee production and standards of quality, which have been experienced in Uganda in recent years. The National Project Coordinator of the project, F.E Mwesigye, says the project will create regulated warehousing, legalised Warehouse receipts and market information systems that will reach small farmer groups and agricultural enterprises. The viability of the scheme is currently being tested in Mbarara and Mbale where two multi-depositor warehouses were established in June this year. A ‘sensitization programme’ was also initiated to make farmers aware of the advantages of marketing coffee through WRS.

Uganda’s deterioration in coffee production has continued despite the liberalisation of the sector in the early 1990s. Mwesigye said, competition at the farm level led to fragmentation, lengthening the marketing chain and disorganising the marketing system. Small-scale traders are now severely under-capitalised and are doing the primary assembling of coffee at the village level. This, earlier, used to be a function of primary societies and the cooperative unions.

According to Mwesigye, warehouses will be certified to ensure that they meet quality parameters, and receipts will be issued. These receipts can be used as collateral in accessing credit worth 70- 80 percent of the commodity value from financial institutions. It is hoped that the project will facilitate bulking, the supply of quality produce to exporters, and access to credit. He added that WRS has been operating successfully in Tanzania.

Cotecna Uganda Limited, a Swiss firm, has been appointed to receive and manage deposits as well as to issue transferable Warehouse receipts. WRS is funded by the Common Fund for Commodities and implemented by Uganda’s Ministry of Tourism, Trade and Industry.

(Daily Monitor, 07.10.05)

Uganda Drops in Global Competitiveness
Uganda has dropped eight places in the latest global growth competitiveness rankings.

According to the Global Competitiveness Report 2005-2006 released by the World Economic Forum (WEF), Uganda dropped from 79th position in 2004 to 87th in 2005 among 117 countries. Its East African counterpart, Tanzania, climbed 11 places from 82nd to 71st position to become the most competitive economy in the region. Kenya is ranked third at 87. The index is designed to measure the set of institutions, market structures and economic policies supportive of national prosperity.

However, Uganda was cited as having the 11th best macro economic environment in Africa out of 25 countries surveyed (71st in the world), putting her higher than Tanzania and Kenya, which are placed in the 76th and 77th positions respectively. In the public institutions index, Uganda ranked lower than Tanzania at position 84 in the world, while Tanzania stood at position 59 and Kenya further behind at 92.

“By highlighting the strengths and weaknesses of an economy, policymakers and business leaders are offered an important tool to assist them in the formulation of improved economic policies and institutional reforms”, said Klaus Schwab, the Founder and Executive Chairman of the WEF. He said the Report is a contribution to enhancing understanding of the key ingredients of economic growth and prosperity.

Finland remains the most competitive economy in the world, topping the rankings for the second consecutive year. The US is in the second position, followed by Sweden, Taiwan, Denmark and Norway, consecutively. South Africa is the continent's best-ranked country at position 41. Other African countries that have shown good performances in the rankings are Botswana (46th) and Mauritius (52nd).

The study is one of the leading monitors of the competitive condition of economies worldwide. WEF has been producing competitiveness reports for 26 years. The rankings are drawn from publicly available data for each of the economies studied, and from a comprehensive evaluation conducted by leading research institutes and business organisations in the countries covered by the report.

The survey questionnaire was designed to capture a broad range of factors affecting an economy's business environment that are key determinants of sustained economic growth. Particular attention was placed on elements of the macroeconomic environment, the quality of public institutions, which underpin the development process, and the level of technological readiness and innovation. Last month, a World Bank 'Ease of Doing Business’, study showed that globally, Uganda was in 74th place, while Kenya 68th and Tanzania 136th, in terms of ease of starting and running new businesses.

(The Monitor, 04.10.05)

Commercial Laws Set for Public Scrutiny
Twenty-five revised commercial laws are being printed out for the public and the business community to debate over and make recommendations.

“They (laws) will be out for debate this month. They are still proposals because working on a law is a long process and to be passed fast, it depends on what the Government takes as a priority”, Peter Edopu, of the Uganda Law Reform Commission (ULRC), said.

The laws include the ones pertaining to company, competition, contracts, cooperatives, and copyright and intellectual property laws. Some of the others relate to; geographical indications, intellectual property covering traditional medicine, trade marks, special economic zones, plant variety protection, trading licenses and sale of goods and services.

The ULRC is also making efforts to publicise other laws, passed between 2001 and 2004, and which are relevant for the business community.

(New Vision Online, 03.09.05)

Quality Mark Good for Sales
Despite a nearly 50 percent increase in the number of companies that have met the national standards certification mark over the last eight months, Uganda still has the lowest number of products certified by the National Bureau of Standards. Only 104 Uganda products have received formal approval from the Uganda Standards Certification agency (UNBS), which entitles them to use the quality mark, the UNBS mark on their products. Tanzania has 400 certified products while Kenya has 163 products, according to the websites of the respective standards bodies.

In January 2005, Uganda had only 62 certified products, according to UNBS standards officer Deus Mubangizi. The standards body however complains, that some companies have been using the quality mark, illegally.

One of them involved the edible oil firm, BIDCO, which UNBS executive director, Dr. Terry Kahuma, directed to stop using the quality mark. Kahuma directed BIDCO to suspend production and sale of products bearing the certification mark, until the UNBS formally permits the company to use the mark after meeting the regulatory requirements.

Kahuma acted in response to a complaint by Consumer Education Trust of Uganda (CONSENT) that BIDCO had been misleading consumers by using the mark. “Consumers should not be misled through misrepresentation and unfair competitive practices”, wrote Henry Kimera, the CONSENT chief executive.

UNBS regulations stipulate that certification is voluntary, but Mubangizi said plans were underway to make it compulsory – especially for food products. According to Mubangizi, companies that apply for certification pay Shs 800,000. The permit is valid for one year, after which it is renewed annually. He however, called upon more companies to register, saying they would reap many benefits. “The more certified products you have, the more your products are recognised for their quality, meaning they can even penetrate the international market”, he said.

Product certification also guarantees an assurance of protection from unfair competition, in which, products that conform are identified by the quality mark they carry, as against the inferior ones.

Mubangizi said certified products also profit from a better image projected on the local and international market, since the quality mark safeguards the image and reputation of the manufacturer.

(Source: The Weekly Observer, 01.09.05)

Regional News

Common Textile Policy Mooted for EAC
Uganda’s Minister of Trade, Tourism and Industry, Daudi Migereko has observed that a common textile policy for the members of the East African Community (EAC), would promote the local textile industry, so that clothes are produced locally, instead of importing them second-hand. To this end, he assured of being in consultation with his colleagues in Tanzania and Kenya.

Migereko was speaking at a dialogue on the opportunities and challenges in the cotton sector, commissioned by two local NGOs: DENIVA and KADDE-NET. The study cited fluctuation of cotton prices and lack of access to modern farming tools, as some of the causes of declining cotton production.

Migereko said Uganda’s President Museveni is strongly in support of the move to revive defunct textile industries and support existing ones to improve their production capacity. Government grants are to be given to local companies to invest in modern machinery, in order to revamp the industry.

The Minister urged the Cotton Development Organisation to support farmers in the acquisition of modern farming tools. He added that through cooperatives and associations, farmers could acquire tractors and fertilisers to boost production.

(Daily Monitor, 25.10.05)

Energy to Boost Investment and Growth
A recent meeting of the Southern African Power Pool (SAPP) was attended by representaives from power utilities, such as Eskom, and members of other Southern African Development Community (SADC) countries. South African Minister of Minerals and Energy Lindiwe Hendricks, addressed the delegates, saying that: “lack of access to electricity frustrates economic development, impacts negatively on quality of life and environmental improvements, and it condemns millions of people to continued poverty”.

The Minister pointed out that a growing demand for electricity and energy accompanies economic growth and sustainable development. She said it was important for all countries in southern Africa to work together to meet the demand. Increased electricity generation capacity and increased electricity coverage culminating in universal access, were some of the challenges facing the region.

Hendricks referred to the World Energy Outlook of 2004, which stated that more than a quarter of the world population is without access (two-thirds in Asia and the rest in Sub-Saharan Africa). Taken in conjunction with the 2004 report of the African Development Bank indicating a 3.7 percent growth in Africa in 2003, (nearly one percent higher than 2002), the need to provide energy and electricity was urgent. They would contribute towards new growth opportunities, which have a cumulative effect in improving quality of life, job opportunities and investment potential.

Hendricks added that the impact on SADC would also be positive. Regional integration will lead to SADC being able to negotiate from a stronger base, and could lead to its successful integration into the global economy.

Interconnections in the region began in the 1950s. Hendricks pointed out that there were previously two primary electricity networks in the region: the southern one based principally on thermal generation with transmission links interconnecting Namibia, South Africa and Mozambique; the second based on hydropower with transmission links interconnecting Congo, Zambia, Mozambique (partially) and Zimbabwe.

Hendricks mentioned plans to explore every available opportunity to expand the capacity of SAPP, such as the massive hydro potential at Inga, in Congo. She said consideration is also needed for other energy sources, such as renewable energy and nuclear energy, given the challenge of diminishing generation capacity.

(Creamer’s Engineering News, 13.09.05)

SADC Investment Programme
The European Union and the Southern African Development Community entered into the EU-SADC Investment Promotion Programme (ESIPP) in 2002. However, due to various delays, it only became active last year. ESIPP has three major goals:

  • to promote intra- SADC investment;
  • to forge inter-regional cooperation; and
  • to promote investment from Europe into SADC.

John Gowen, Programme Manager, ESIPP referred to a grant, which was available to anyone interested to promote business within the SADC region. The grant is provided by intermediary organisations that form the ESIPP backbone. It is hoped that SADC countries will form partnerships and identify projects of common interest.

He pointed out five sectors, which have been highlighted as priority areas for development:

  • building materials and construction; ,
  • light engineering;,
  • tourism; ,
  • mining; and
  • agro-industry.

Intermediary organisations from SADC and EU countries would meet in Gaborone under the auspices of the Botswana Export Development and Investment Authority (BEDIA), to discuss ways for promoting business and investment networking.

(Daily News, Government of Botswana, 16.09.05)