Competition Reforms in Key Markets for Enhancing Social & Economic Welfare in Developing Countries (CREW Project)

Meeting Agenda5Day II (9th November 2012)0900hrs: Discussions on Programmatic Issues Reporting & Management Donor Coordination Project Advisory Committee (Composition, Role & Engagement)1100hrs: Tea Break1115hrs: Discussions on Programmatic Issues Technical Oversight (Sub-Committee, Advisers, PAC)1300hrs: Light Lunch1330hrs: Discussions on Programmatic Issues Plan for Inception Phase1500hrs: Recap & Closing 5Participants6GIZ (Germany) Johanna Speer, Eiko Kauffmann & Sebastian Gilcher DFID (UK)- Miguel LaricCUTS InternationalPradeep S Mehta, Rijit Sengupta, Cornelius Dube & Julian MukiibiProject Advisers- Fred Jenny & Shyam KhemaniOthers- Representative of DIE, GermanyPurpose of the Meeting7Harmonise implementation process involving all actorsHighlight key substantive issuesDiscuss certain programmatic componentsIdentification of the project countriesDiscussions on possible sectors: criteriaDiscuss the Operational Plan for the Inception PhaseEnhance familiarity between the project team and donorsSign the Contract(s)8II. ABOUT THE PROJEC TCREW Project Goal & Objectives9GoalTo better demonstrate measurable benefits from an effective competition regime in DCs, for ensuring long-term support for competition reforms

ObjectivesEnhance understanding of benefits from effective competition regimes in DCsDevelop & Test a Methodology to assess efficacy of competition reforms in benefitting allAdvocate to key actors (National & International) for greater support to competition reforms in DCsSustain momentum on competition reforms and take it forward CREW project Outputs & Outcome10OutputsDocumented evidence of benefits from competition reforms in key marketsDialogues involving multiple stakeholders on benefits of competition reforms in DCsStrategy for capacity building of DC competition agencies and sector regulatorsFramework that guides the process of competition reforms in DCsDemand from other countries for similar exercise

Outcome Greater attention and impetus for competition reforms in key DC markets resulting in consumer and producer benefits

CREW Project - Implementation114 Countries: 2 Asian & 2 African2 Sectors: High impact on the poor

Phase I: Identify indicators and enablers of an effective competition regime (Diagnostic report) Phase II: Develop Framework for Competition Promotion (FCP) for the 2 sectors Phase III: Apply sectoral FCPs in micro-locations in 4 project countriesCREW Project Caveats12It is not a project only about competition enforcement, it is much more comprehensive in scopeIt will not measure impacts of competition on producers and consumersActivities will be restricted to 4 project countries and 2 sectorsUptake of the exercise in other countries would depend on interest of beneficiaries 13III. KEY PROJECT ELEMENTSEffective competition reforms process: tracing the pathway (Theory of Change)14Foundation: Consensus for reformsFacilitation: Reforms are plannedAction: Reforms undertaken & Political Economy issues addressedOutcome: Policies refined, enforcement and revenue gainsResult: New products/services enter markets and offer more choices at low cost to consumerGoal: Social and Economic welfare

IllustrationProject Phases15Phase IIndicators for measuring benefits of competition (countries)Enabling (critical) factors Phase II Development of FCPs (2 sector) 4 StepsPhase IIIApplication of FCPs (micro-locations in 4 countries)- Research (market studies, competition distortion)- Advocacy- Capacity building- Media Outreach- Additional Activities (RECs, other sectors)Project Countries: Criteria for Selection16Presence of a functional competition lawPresence of an active competition enforcement agency Local (research and advocacy) institutions with orientation on competition and consumer protection issues2 countries each from the regions: Africa and AsiaOne country in each region of DFIDs interestOne member state each of SADC and ASEAN Electricity as one of the two sectorsCUTS experience of having implemented an earlier projectCUTS confidence of implementing the activitiesCriteria for selecting Sectors - discussions17High impact on the poorEssential goods and servicesAvailability of dataExistence of a sector regulatorDonor interestEtc

Critical issues in Research18Indicators of benefits from competition (Consumers & Producers)- Identifying the indicators- Measuring the indicators (qualitative & quantitative methods)- Creating a comprehensive frameworkExisting evidence, research findings, approaches/methodsSelecting Project Countries criteriaDiscussion on criteria for selecting sectorsAvailability of data in project countriesLocal research capacityInternational expertiseMeasuring Indicators to assess benefits19BENEFITSMethods = Qualitative + QuantitativeBenefits of competition reforms for Consumers (Indicators)20 Access: Goods and services reach consumers in areas where they were not available earlier

Quality: Quality of goods and services enhanced by firms to attract customers

Choice: New firms/products enter otherwise concentrated markets

Price: Prices are reduced in a contestable market

Benefits of competition reforms for Producers (Indicators)21 Level-playing field: principle of competitive neutrality is observed Access to essential services: firms can easily access infrastructure networks, etc. Free movement of goods & services: Mobility not affected by policies, practices (inputs & outputs) Predictability of regulatory actions: Legislations enforced by autonomous yet accountable institutionsBenefits of competition reforms for Producers (Indicators)22 Cost savings: Effective implementation of strategies to reduce costs, e.g. improved application of ICT tools Fair market processes: Easy entry and exit in markets; considerable ease of doing business Transparency in market: Well laid out policies and predictable implementation processes (market regulators)

Existing Evidence & applicable Methods23Research findingsJapan (2001) - positive effects of competition on industrial growthSouth Korea (2003) - competition reforms a remarkable turning pointTanzania (2004) - competition increased firm-level productivityJordan (2005) impact of concentration & barriers on productivityEgypt (2005) liberalisation of market leading to productivity gainsAustralia (2005) - AU$ 20 billion gain in real GDP from NCP

International experienceRelevant organisations (research organisations, international donors, IGOs, international organisations)Useful existing approachesAvailable data (country and sector level)Enforcement & Advocacy Experience24Consumer benefitsCollective price fixing by Cambodian boaters (2005)Cartelisation in city bus service in Nepal, Uganda (2005)Concerted practice w.r.t interest rates among Namibian banks (2006)Abusing dominance in Mauritian milk sector (2007)Lack of competition in mobile phone market in Togo (2010)

Producer benefitsOrange monopoly in Indonesia affecting farmers (1991)Price-fixing in auctioning of tobacco in Malawi (2005)Relieving cotton farmers from abusive practices in Zambia (2006)Highlighting challenges for SMEs in Namibia (2006)Application of FCPs: Advocacy & Outreach 25Impact of ACPs on producers, consumersAdvocacy related to competition distorting policiesParliamentary outreach and discussionsGovernment-Business ForumMedia (information) campaignApplication of FCPs: Capacity Building26Training Workshop for CAs and Sector Regulators- Enhance enforcement capacity (based on market studies)- Highlight need for coordination of actions (CA + SR)

National Orientation Workshop (other sectors)- Expanding support for competition reforms- Better buy-in (other sectors)

27IV. MANAGEMENT & PROGRAMMATIC ISSUESKey issues: Development partners28RolePropose PAC membersGuide project implementation processParticipate in internal reviewInvolve closely with external evaluationStock-take project progress, periodicallyAct in coordinationEngage country-offices in project countries/regionInvolve other donors & IGOsOther donors to join in supporting CREW subsequently

Key issues : Development partners29Reporting & ManagementDonor Coordination Reporting arrangementsGAANT ChartOperational Strategy Note (OSN)

BudgetAmountValue for Money (VfM) indicators:(i) Admin expenses (travel & OH) as % of total expenses (phase-wise)(i) Admin expenses (travel & OH) per output or country (phase-wise)(iii) Programmatic expenses (research, validation and application) as % of total expenses (phase-wise)

Key issues: Technical oversight30AdvisersTwo Advisers (Shyam Khemani & Fred Jenny)Point out relevant techniques, methodsGuide in developing ToRs of reports, etc.Advise on sources of useful informationSecure useful reports, dataHelp draft and re-draft parts of reportsPlay an active role in outreachGet involved in capacity building activities

Associate OrganisationDraf tthe background paperAssist in preparing sectoral FCPsKey issues: Project Advisory Committee31Composition: International experts, practitioners from regions, international organisations, donors, RECs, etc.

RolePoint sources of useful information (techniques, methods, data ) at country/sector levels Quality control of project reports, briefs, etc.Strategic advise (advocacy & outreach)Finalisation of project countries (4)Advise for choosing sectors (2)Address challenges in implementationGet involved in capacity building

Key issues: Project Advisory Committee32Meetings & Interactions (Project Team)Physical meetings once a year (CREW meetings)Meetings on sidelines of international conferences (OECD GCF, UNCTAD IGE, ACF, etc.)SKYPE meetings (bi-annual)Quarterly reports and feedbackAny other possibilitiesPlan for Inception Phase33Planning MeetingDrafting the Operational Strategy Note (OSN)Identification of PAC membersToR of Project Adviser(s)Identification of Project Associate Organisation (PAO)Drafting of background paper by PAO, Measuring impacts of competition reforms : suggested approaches & methods Inception Meeting in February 2013 (Nairobi, Kenya)Identification of sectorsAny other issues3435Thank YouCUTS Team

Beginnings are always exciting!