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

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Strengthening Constituencies for Effective
Competition Regimes in Select West African
Countries (CUTS 7Up4 Project) PROJECT LAUNCH
MEETING 19-20 June, La Palm Royal Beach Hotel,
Accra, Ghana Draft Preliminary Country Paper
(PCP) COMPETITION REGIME SCENARIO IN
NIGERIA Presented by ADEDEJI, Babatunde
Abiodun CStat. Coordinator-General /
Founder Consumers Empowerment Organisation of
Nigeria CEON (Formerly, Consumer Affairs
Movement of Nigeria CAMON)
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Outline of the Presentation

• General Background
• Nigeria Profile
• Social and Economic Policies affecting
  competition in Nigeria
• Development Policy
• Agriculture Development Policy
• Industrial Policy
• Privatisation and Regulatory Reforms
• Investment Policy
• Government Procurement Policy
• Consumer Protection Policy
• Sectoral Policies
• Power
• Water
• Telecom
• Transport
• Financial Services
• Health Services
• Anticompetitive Practices
• Conclusions

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I. General Background

• Geographical Location Nigeria is situated in the
  West African region and lies between longitudes 3
  degrees and 14 degrees and latitudes 4 degrees
  and 140 degrees. It has a land mass of 923,768
  sq.km.. It is bordered to the north by the
  Republics of Niger and Chad. It shares borders to
  the west with the Republic of Benin, while the
  Republic of Cameroun shares the eastern borders
  right down to the shores of the Atlantic Ocean
  which forms the southern limits of Nigerian
  Territory. The about 800km of coastline confers
  on the country the potentials of a maritime
  power. Land is in abundance in Nigeria for
  agricultural, industrial and commercial
  activities.
• Government Three-tier structure - A Federal
  Government, 36 State Governments, 774 Local
  Government Administrations
• Population 144.7million (year 2006 census)
• Official Language English
• Main Indigenous Languages Hausa, Igbo, Yoruba
• Over 200 ethnic nationalities
• Main Religions Christianity, Islam, Traditional
• Main Commercial/Industrial Cities Lagos,
  Onitsha, Kano, Ibadan, Port Harcourt, Aba,
  Maiduguri, Jos, Kaduna, Warri, Benin,Nnewi
• One of the largest producers of crude oil in the
  world and Second Largest market in sub-Sahara
  Africa
• It also has enormous natural gas reserves, vast
  agricultural lands, natural resources and a
  dynamic private sector
• Very big telecoms market GSM subscribers base
  rising from 40,000 in 2001 to 46.2 million in
  2007
• Economy fast growing and promising
• Democratic Government
• Peaceful and healthy environment for Investors.

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Profile
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II. Social and Economic Policies affecting
Competition in Nigeria

• Development Policy (NEEDS)
• The National Economic Empowerment and Development
  Strategy
• (NEEDS) 2004 2007 is Nigerias reform based
  medium-term plan for
• economic recovery, growth and development.
• NEEDS was conceptualized in 2003 and launched in
  2004, as a
• response to the numerous challenges facing the
  nation. Some of the
• challenges include the following-
• Near collapse of social and economic
  infrastructure
• Per capita GDP remained stagnant prior 1990 Grew
  at 2.2 1999 2003
• Total GDP 2001 45 billion
• Per capital income was 300 a year
• External and domestic debt 70 of GDP
  (difficult to service debt, domestic debt rose by
  200 between 1999 and 2002 about 9.0billion)
• Real sector dominated by primary production
  sectors agriculture 41, crude oil 13,
  manufacturing 5 7 of GDP
• High macroeconomic volatility (exchange rate,
  inflation rate, budget deficit, GDP growth rate,
  GDP per capita - among the worst in the world)
• Finances at all levels of government in poor
  shape (pension crisis, arrears of salaries, huge
  debt misallocation and mismanagement)
• Nigerian urbanization rate 5.3 (one of the
  fastest in the world)
• High level of poverty (about 70)
• Dysfunctional education system (low standard,
  institutions decay, youth militancy etc)

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Development Policy - Continues

• The conceptual issues on NEEDS/SEEDS are based on
  four goals
• Poverty reduction,
• Wealth creation,
• Employment generation,
• Value re-orientation.
• The framework for actualizing the goals of NEEDS
  is anchored on three
• pillars
• Empowering people and improving social
  delivery,
• Fostering private sector led growth through
  creating the appropriate
• enabling environment, and
• Enhancing the efficiency and effectiveness of
  government, by changing
• the way government does its work.
• The SOCIAL CHARTER under NEEDS covers the
  following key areas
• Economic empowerment and poverty Reduction
• Education
• Health

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Agriculture Development Policy

• Nigeria's agricultural policy aims to
• ensure food security,
• promote domestic trade,
• enhance foreign exchange earnings,
• promote export diversification,
• enhance access to agricultural raw materials,
• encourage participation in preferential trade
  arrangements, and
• promote the use of modern technology and the
  quality of agricultural exports.
• Following are some of the Federal Government of
  Nigeria Policies on
• Agriculture Development
• The Presidential initiatives on rice, cassava,
  vegetable oil, tree crop,
• livestock, fisheries, aquaculture development,
  and rubber.
• A Programme for raising maize production from 7m
  metric tones to
• 14m metric tones, by the end of 2007, and
  tropical fruit production
• were put in place between 2004 and 2005.
• Implementation of the National Special Programme
  for Food Security.

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Major Agricultural Imports, Exports and
Contribution to Economic Activity

• Agricultural output consists mainly of food
  crops, such as cassava, yams, sorghum, millet,
  maize, groundnuts, palm fruit cash crops, such
  as palm oil, rubber, cocoa, cotton, gum arabic,
  and shea butter poultry, goats, lamb, pigs, and
  cows fishery products and forestry products.
• the major agricultural imports being wheat, rice,
  sugar, palm oil, milk, meat, and fish.
• The main agricultural exports commodities are
  cocoa beans, coffee, copra, cotton, palm-oil and
  soya bean.
• Agricultural contribution to economic activity
• The agriculture sector plays a significant role
  in the Nigerian
• economy
• In spite of the dominance of oil, the sector is
  the mainstay for the majority of Nigerians,
  employing some 70 of the country's labour force.
  
• Most workers in the sector live below the poverty
  line
• agriculture accounts for some 67 of national
  poverty, thus the sector is crucial in national
  poverty reduction efforts.
• Agriculture remains important for the
  diversification of the economy, in particular its
  export structure
• Some estimates put the sector's contribution to
  GDP at 41.

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Industrial Policy

• The Federal Ministry of Industry's policy
  objective is to transform the Nigerian economy
  from "its rural and agrarian form to a modern and
  competitively industrialized one". This is to be
  pursued by, inter alia, encouraging the private
  sector to play a pivotal role providing
  services for the training and development of
  indigenous skills and manpower and financial
  support.
• Nigeria's current industrial policy thrust is
  anchored on a guided
• deregulation of the economy and Government's
  disengagement from
• activities which are private-sector oriented,
  leaving Government to play
• the role of facilitator, concentrating on the
  provision of incentives policy
• and infrastructure that are necessary to enhance
  the private sector's role
• as the engine of growth.
• The industrial policy is intended to
• Generate productive employment and raise
  productivity
• Increase export of locally manufactured goods
• Create a wider geographical dispersal of
  industries
• Improve the technological skills and capability
  available in the country
• Increase the local content of industrial output
  by looking inward for the supply of basic and
  intermediate inputs
• Attract direct foreign investments (FDIs)
• Increase private sector participation.

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Privatisation and Regulatory Reforms

• Growing the Private Sector
• The NEEDS aims at addressing the countrys
  underlying lack of
• competitiveness, which has prevented economic
  growth and
• Development from keeping pace with other
  economies.
• The policy thrust is
• to build a private sector that can take
  advantage of domestic, regional and global
  markets.
• The major strategies include
• re-defining the role of government as a
  facilitator and promoter in the economy
• Strengthening enabling environment through
  improvement in security, policy related costs and
  investment in infrastructure, especially
  electricity, transport and water
• Privatisation and Liberalization and improvement
  in accessibility to cheap finance.

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Privatisation and Regulatory Reforms - continues

• Re-defining the Role of Government
• In line with NEEDS policy thrust, government
  divestment from direct
• production of goods was intensified in 2005 and
  2006
• a total of 111 public enterprises have so far
  been reformed and privatized, covering major
  industrial sectors banking, finance and
  insurances oil and gas telecommunications
  transport and infrastructure power and steel
  manufacturing and hospitality.
• A total of US3.66 billion has been realized
• and about US10 billion annual transfers to
  public enterprises saved.
• In 2006, 38 privatization transactions were
  concluded.
• In additions, giant strides in policy, regulatory
  and institutional reforms have been made, thereby
  improving Nigerias investment climate.

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Investment Policy

• The Nigerian Investment Promotion Commission
  Decree No. 16 of
• 1995
• This decree established the Nigerian Investment
  Promotion Commission
• (NIPC) as the successor to the Industrial
  Development Co-ordination
• Committee (IDCC). The NIPC is an agency of the
  Federal Government of
• Nigeria specially established, among other
  things, to
• Co-ordinate, monitor, encourage and provide
  necessary assistance and guidance for the
  establishment and operation of enterprises in
  Nigeria
• Initiate and support measures, which shall
  enhance the investment climate in Nigeria for
  both Nigerian and non Nigerian investors
• Promote investments in and outside Nigeria
  through effective promotional means
• Register and keep records of all enterprises to
  which the NIPC Decree legislation applies
• Identify specific projects and invite interested
  investors to participate in those projects
• Provide and disseminate up-to-date information on
  incentives available to investors
• Assist incoming and existing investors by
  providing support services and
• Evaluate the impact of the Commission on
  investment in Nigeria and recommend appropriate
  remedies and additional incentives

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Government Procurement Policy

• Public Sector Reforms
• The public sector reform agenda focuses on the
  following
• Restoration of professionalism in the Civil
  Service
• Rationalization, restructuring, and
  strengthening of institutions
• Privatization and liberalization in the sector
• Tackling corruption and improve transparency in
  government accounts,
• Reduction in waste and improve efficiency of
  government expenditures
• and Enhance economic coordination.
• In line with NEEDS, between 2004 and 2006, a
  number of
• institutional And structural measures have been
  put in place to
• ensure the achievement of desired objectives.
  These measures
• include
• Open and competitive tender arrangements for
  government
• contracts
• Establishment of a due process mechanism to vet
  and
• eliminate fat from government contracts
• Massive anti-corruption campaigns involving all
  public officials,
• including the President.

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Consumer Protection Policy

• Existing Consumer Protection Laws
• In Nigeria today, there is no single codified
  document where the
• rights of consumers are contained. What one is
  likely to see are
• several legal enactments establishing certain
  institutions
• charged with the responsibilities of determining
  or regulating
• specific areas of consumable goods and services.
• Prominent among these consumer legislations are
• The Consumer Protection Council Act No.66 of 1992
• The Weights and Measures Acts 1974
• The National Agency for Foods Drugs
  Administration and Control (NAFDAC) Act No. 15 of
  1993
• The Food and Drugs Act 1974
• The Counterfeit and Fake Drugs and Unwholesome
  Processed Foods (miscellaneous Provision) Act
  1999
• Nigerian Civil Aviation Authority (NCAA) Act
  No.49 of 1999
• Standard Organisation of Nigeria (SON) Act
• Federal Environmental Protection Agency (FEPA)
  Act
• Nigerian Electricity Regulatory Council (NERC)
  Act
• Trade Malpractices Act 1992

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Consumer Protection Policy State of its
Implementation, Consumer Awareness and Existence
of Consumer Organisations.

• With the exception of the Consumer Protection
  Council Act, all the other existing consumer
  related legislations are criminal law based,
  which are aimed at punishing the offender and not
  to compensate the victim.
• Level of Implementation of Consumer Protection
  Council Act is low.
• Level of Consumers Awareness is low.
• Absence of small claims court for consumers
  redress.
• Small number of active Consumer Protection
  Organisations. (compared with the size of Nigeria
  number of states, population size etc.).

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Sectoral Policy - POWER

• Power Sector
• NEEDS focus is on the provision of adequate
  electricity supply to the country.
• A major reform in the Power Sector is
• the enactment of a law in 2005 that removed
  monopoly power from National Electric Power
  Authority (NEPA) and subsequently to the
  unbundling of NEPA into 18 successor Companies
  and
• the formation of Nigerian Electricity Regulatory
  Commission (NERC).
• With the on-going reform, coupled with the
  vigorous implementation of the seven National
  Integrated Independent Power Projects and
  conclusion of the privatisation of the three
  power plants in 2007, NEEDS target of increasing
  electricity generation capability from 4200MW in
  2004 to 10,000 by end of FY 2007 was nearly
  attained.
• Electricity supply remains a major challenge for
  private sector Development and competitiveness.

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Sectoral Policy - WATER

• National Water Supply Policy
• The government of Nigeria has a national water
  supply policy
• whose aim is
• Provision of potable water to all inhabitants of
  Nigeria by the
• year 2020.
• The present inadequate level of services should
  be increased to 120 liters per capita per day,
  and 60 liters per capita per day to urban,
  peri-urban and rural areas respectively by the
  year 2020.
• Increase the capacity of local, state and the
  federal government to assist communities to
  obtain basic water supply facilities that the
  communities themselves can maintain with the
  possible support of the private sector.
• The policy thrust of NEEDS in respect of water is
  on participatory,
• integrated and sustainable water resource
  management, to meet the
• nations water needs. The target is to increase
  water coverage to 70.

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Sectoral Policy - TELECOM

• In 2000, the Government set out a National Policy
  on
• Telecommunications with the overriding objective
  of modernizing
• and rapidly expanding the telecommunications
  network and services
• in Nigeria.
• This has been pursued by allowing more private
  operators in the sub-sector.
• The short-term objectives of the plan are to,
  inter alia,
• implement network development projects to ensure
  that the country meets and exceeds the ITU
  recommended minimum teledensity of one telephone
  for 100 inhabitants
• participate effectively in international
  telecommunications activities in order to promote
  telecommunications development in Nigeria, meet
  the country's international obligations, and
  derive maximum benefit from international
  cooperation in these areas
• establish a National Frequency Management Council
  (NFMC)
• ensure that the Government divests its interest
  in the state-owned telecommunications entities
• promote competition to meet growing demand
  through the full liberalization of the
  telecommunications market and
• review and update telecommunications laws in
  order to bring all telecommunications operators
  under the regulatory control of NCC.

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Sectoral Policy TRANSPORT

• Policy initiatives in the Transport sub-sector
  seek to achieve a more effective, productive, and
  safe transportation system.
• A National Transport Sector Policy was developed
  in 2003. The policy aims to, inter alia,
• promote trade and transport services through an
  efficient and affordable integrated transport
  network, and transparent and streamlined
  administrative procedures based on modern
  management techniques
• improve the safety, security, quality, and speed
  of movement of goods and people
• increase the involvement of the private sector in
  the financing and operation of transport-related
  services
• structure the infrastructure to ensure
  environmental sustainability and internationally
  accepted standards
• build a strong financial base for the creation,
  maintenance, and upgrading of transport
  infrastructure and
• promote public transport over private car travel.

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Sectoral Policy FINANCIAL SERVICES

• The regulatory and supervisory institutions
  governing financial services
• include
• the Central Bank of Nigeria, which is the highest
  regulatory and supervisory authority
• the Ministry of Finance, which cooperates with
  the CBN on monetary matters
• the Nigeria Deposit Insurance Corporation (NDIC),
  which complements the functions of the CBN by
  providing deposit insurance to boost confidence
  in the banking system
• the Securities Exchange Commission (SEC), which
  seeks to promote an orderly and active capital
  market
• the National Insurance Commission (NAICOM), which
  regulates and supervises the insurance industry
  
• the National Board for Community Banks (NBCB),
  which seeks to support the establishment and
  operation of community banks and
• the Financial Services Regulation Coordination
  Committee, which seeks to coordinate the
  supervision of all financial institutions.
• Under the GATS, Nigeria bound, without
  limitation, cross-border
• Supply and commercial presence for banking
  services. Foreigners,
• Corporate or individuals can own up to 100
  equity in any
• enterprise

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Sectoral Policy HEALTH SERVICES

• Health Sector Policy thrust
• Strengthening of the National Health System
• Improving the availability and management of
  health resources
• Reducing the disease burden and improving
  physical facilities
• (HIV/AID, Malaria, Tuberculoses and STD)
• Improving financial access to good quality health
  services.

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Anti-competitive Practices

• Following are some of the prevailing
  anticompetitive practices in
• the Nigeria market
• Cartel
• Price fixing
• Market division
• Excessive Pricing
• Bid rigging
• Tied selling
• Price discrimination
• Misleading Advertisements
• False Advertising
• False representation

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Conclusions

• Presently, there is no Competition Law in Place
  in Nigeria.
• Government is committed to developing a law
  though there is no consensus on the institution
  that the competition agency should be house
  under.
• Efforts have been made to incorporate Consumer
  Protection elements into the Competition Bill,
  and evolve a hybrid agency to implement it.

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• Thank you
• Adedeji, Babatunde Abiodun CStat
• CEON, Nigeria