Competition Law and Policy in the Africa Continental Free Trade Area

The African Union (AU)’s 18th Ordinary Session of Heads of State in Addis Ababa, Ethiopia in 2012 adopted a decision to establish the Africa Continental Free Trade Area (AfCFTA) by 2017. Impressively, the AfCFTA officially became feasible when Nigeria signed the historic agreement.  The formation of the AfCFTA has been hailed as a political victory that is expected to prepare Africa for a more competitive footing in the global market place.

The prelude to the AfCFTA was the adoption of “Agenda 2063”, a 50-year development trajectory for the realisation of an “integrated, prosperous and peaceful Africa, driven by its own citizens and representing a dynamic force in the international arena”. African countries face substantially similar challenges: high inequalities, high unemployment, stagnant SMEs, monopolistic industrial structures and cartels. Generally, competition law and policy in Africa has been influenced largely with the motive of controlling monopolistic market power and other restrictive business practices, more so of multinational corporations (MNCs).

AfCFTA targets “One African Market” for goods and services, with free movement of business persons and investments, ultimately, Continental Customs Union. Other AfCFTA objectives are:

  • Harmonisation and coordination of trade liberalisation and facilitation regimes and instruments across the various Regional Economic Communities (RECS);
  • Resolve the challenges of multiple and overlapping memberships; and
  • Enhance competitiveness at the industry and enterprise level through exploiting opportunities for scale production, continental market access and better reallocation of resources (www.au.int).

It is here posited that the attainment of these objectives is not possible without fair and accountable competition for resources, their management, allocation and control. Therefore, a progressive, measurable and responsive continental competition policy (CCP) is an important milestone that Africa must pursue. What exactly should be the hallmark of such a CCP framework?

Such a framework must build from the support of the existing RECs, who in their regional treaties have competition policy objectives. For instance, the Central African Economic and Monetary Community (CEMAC) was created in March 1994 as a customs and monetary union among six former French Central African countries: Cameroon, Central Africa Republic, Chad, Congo, Equatorial Guinea and Gabon to provide macroeconomic stability and credibility required to sustain the fixed exchange rate for the common currency (CFA). The CEMAC Commission, implements a common competition policy in terms of Regulation No. 1/99/UEAC-CM-639 of 25 June 1999.

The second REC is the SOUTHERN AFRICAN CUSTOMS UNION (SACU). SACU, is reckoned to be the oldest formal customs union in the world. It was established on 29 June 1910 pursuant to a Customs Union Agreement between the then Union of South Africa and the High Commission Territories of Bechuanaland (now Botswana), Basutoland (now Lesotho) and Swaziland. Later Namibia joined

Articles 40 and 41 of the SACU Agreement provide that Member States agree that there shall be competition policies in each State, including Unfair Trade Practices.

SACU States have not agreed on regional enforcement. Discussions have been on and off since about 2010.

The third REC is the SOUTHERN AFRICA DEVELOPMENT COMMUNITY (SADC). SADC includes all SACU Countries and Angola, Congo DR, Madagascar, Malawi, Mauritius, Mozambique, Seychelles, Tanzania, Zambia, Zimbabwe. The SADC Trade Protocol was signed in 1996. Under its Article 25, Member States committed to implement measures that foster fair competition. Further, Heads of State “SADC Declaration on Regional Cooperation in Competition and Consumer Policies” was signed in 2009 and a Competition and Consumer Policies Committee (COCOPOLC) at the SADC Secretariat coordinating an MoU amongst national competition authorities was signed.

The fourth REC is the WEST AFRICAN MONETARY UNION (WAEMU or UEMOA). WAEMU was set up in 1994 with eight (8) West African countries sharing a common currency, the ‘CFA franc’. These are Benin, Burkina Faso, Côte d’Ivoire, Mali, the Niger, Senegal, Togo and Guinea Bissau.  Article 4(c) of the Treaty calls for a Common Market, of which Article 76(c) recommends the introduction of common competition rules that apply to public and private companies and to public subsidies. The competition rules are under Article 88 of the Treaty. Arising from this, a number of regulations and directives have been issued to implement the rules.

The fifth REC is the EAST AFRICAN COMMUNITY (EAC). EAC is established under the Treaty for the Establishment of the East African Community of 1999 (entered into force on 7th July 2000; amended on 14th December, 2006 and on 20th August, 2007). It has five (5) Members: Burundi, Kenya, Rwanda, South Sudan, Tanzania, and Uganda. Under Article 75(1)(i) of the Treaty, theEAC is mandated to come up with a Protocol on Competition, in furtherance of the objectives of the envisaged Customs Union. An EAC Competition Act was adopted in 2006.

The sixth REC is the Economic Community of West Africa States (ECOWAS). ECOWAS Regional Competition Authority (ERCA) was established pursuant to “Supplementary Act A/SA.2/06/08 on the Establishment, Function of the Regional Competition Authority for ECOWAS” of 2008, which was amended by the 2013 “Supplementary Act A/SA.4/07/13 Amending the Supplementary Act A/SA.2/12/08 on the Establishment, Functions and Operation of the Regional Competition Authority for ECOWAS”. Competition Rules were promulgated through the “Supplementary Act A/SA.1/06/08 Adopting Community Competition Rules and the Modalities of their Application within ECOWAS” of 2008 as well. Under Article 3 therein, the purposes of the Supplementary Act include prohibition of any anti-competitive business conduct that prevents, restricts or distorts competition at the regional level. The ERCA is operational from the Gambia.

The seventh REC is the COMMON MARKET FOR EASTERN & SOUTHERN AFRICA (COMESA). COMESA was formed in 1994 (successor to the then Preferential Trade Area of 1981). Members include Burundi, the Comoros, Congo DR, Djibouti, Egypt, Eritrea, Ethiopia, Kenya, Libya, Madagascar, Malawi, Mauritius, Rwanda, Sudan, Swaziland, Seychelles, Uganda, Zambia and Zimbabwe. Article 55 of the COMESA Treaty provides for competition policy and Competition Regulations were officially adopted in November 2012 and the COMESA Competition Commission became operational in 2013 COMESA Official Gazette, Volume 17 No. 12 20 November 2012. COMESA is the largest trading group in Africa and has also implemented regional competition framework in a manner worthy of a model for a future CCP.

In the last few years, there was discussion about a Tripartite Free Trade Area (TFTA). The TFTA, (involving COMESA, SADC and EAC) was launched in Sharm El Sheikh, Egypt on 10 June 2015. Prior to signing this agreement, there was a draft annex for cooperation in competition policy, which is yet to be agreed upon and adopted.  Some of the pre-TFTA discussions were about having a TFTA Competition Commission, which would oversee advocacy and enforcement of the tripartite competition policy across the three regions. The TFTA, if implemented timeously, shall most probably provide a clear blue-print for the CCP framework.

The actualization of a CCP is equally important in relation to Africa’s multilateral relationships and preparedness. Such would likely feed into any future attempt for a multilateral framework on competition law and policy.

Driving a Pan-African competition policy requires greater advocacy, up-skilling and legal harmonisation across the various RECs. Regionalism and general protectionism may affect and has affected progress in TFTA. Further, the support of bigger economies/countries is a necessary ingredient while assurances need to be clear to small economies that they will equally benefit from a CCP framework. It is noteworthy that Egypt, Kenya, Nigeria, South Africa, have functional competition laws and functional institutions (although Nigeria’s federal competition authority was established in 2018).

Having a continental Competition Authority shall require a prepared and active legal fraternity in Africa. Capacity building through national and regional competition authorities as well as informal continental competition advocacy groupings such as Africa Competition Forum would be expected to readily take up this role.

By Thula Kaira, AB & David Zambia