| Issue 9 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| A BACKGROUND TO COMPETITION REGIME IN ZIMBABWE By
January 2001
====================== Background to Competition Regime In Zimbabwe; 1.0 A General Profile of Zimbabwe Zimbabwe is centrally located in southern Africa covering land area of 390 245 sq. kilometers with a current population of about II million. It gained independence from Britain in 1980. GDP in 1997 was US$9.0 billion made up of 19% agriculture, 25% industry and mining and 56% services. For the past two decades average annual population growth was about 3.2 compared to an average annual GNP growth of 1.8%. The backbone of the economy is agriculture, manufacturing, mining and tourism. The major agricultural products and exports arc tobacco, cotton, maize, sugar, coffee beef and horticulture. The manufacturing sector is diverse and includes foodstuffs, tobacco processing, textiles, clothing, paper, furniture wood chemicals and metals. Mining sector is also diversified and boosts of gold, nickel, copper, chrome, iron ore platinum and diamonds. Zimbabwe’s diversified productive base was supported by a relatively advanced financial system, including commercial banks, merchant banks, insurance companies, and a stock exchange and a well developed infrastructure including an inter-urban road network, rail lines tying the country into extensive central and southern African. Notwithstanding a background of a diversified economy, the country suffers from a litany of poverty statistics. According to the 1999 UNDP Human Development Report, Zimbabwe is ranked number 130 in the world with a human development index of 0.560 regarded as bottom end of the medium human development. Life expectancy at birth in 1997 was 44 years compared to 50 years in 1970, while for the respective years infant mortality is down to 53 from 83 per thousand. In 1997 it was also estimated that 75% of she population is expected not to survive beyond 60 years. Adult literacy rate in Zimbabwe is 88% for female and 94% for male, which is one of the highest literacy rates among developing countries. However, benefits of human resources development are greatly reduced by HIV-AIDS estimated to he affecting over 30% of the economically active population. The level of employment has been affected negatively by the rapid population growth and deficiency in economic growth. According to Standard Chartered Bank Business Trends [Sept. 1998], a total of 140.000 new jobs were created in the first 7 years of 1990 at the rate uf 17500 a year. Most [56000] were crested in large-scale agriculture followed by education [41 000] and other services sectors [32000]. This is certainly far behind the level of new entrants into the labor market estimated at 300000 annually. Apart from the pressure from new entrants liberalization has had causalities among those already in employment. Deficiencies in policy and ideological convictions have affected economic performance. At independence in 1980, Zimbabwe inherited a relatively closed economy with inward looking policies and it continued with such policies in line with its socialistic orientation. The policies immediately threatened the existing economic base, they did little to encourage private local and foreign investments that would expand the industrial base, address monopolistic and oligopolistic behavior and deepen economic base. ===================== Although the issue of competition law is still in its infants in Zimbabwe, the Competition Commission has managed to make some major in roads towards the prevention and control of anti-competitive practices and regulation of mergers. However, in this period the Commission has been operating it has encountered two major problems in implementing the Competition Act. First, given the fact that competition law is relatively new concept in Zimbabwe, there has been some suspicion from the private sector and the business community in general. This has made the implementation of Competition Act a bit difficult dose to lack of cooperation from the latter groups. This lack of cooperation could however be attributed to lack of information because the Commission has not been in a position to actively publicize its objectives and activities to the business community. Second, another pertinent constraint towards effective implementation of competition law in the country is lack of resources. The Commission’s activities are funded by government, which has limited financial resources at its disposal. This budgetary constraint is affecting the Commission’s operations in the sense that it is making it difficult for it to attract and, retain competent staff. As a solution to the first problem, the Commission intends to implement a compliance program aimed at creating a culture of competition in the country. Under this program, the Commission has already started publicizing its activities to the business community through seminars and workshops, the media and information pamphlets. With respect to budgetary constraint not much has so 1hz been done to alleviate, but in order to enhance the competence of its staff the Commission is sending them on short terms courses and organizing country visits in order get first experiences on how some countries have been implementing their Competition laws. However, it can be added that although the work of most Competition Authorities worldwide is generally complaint driven from businesspersons and consumers, the Competition in Zimbabwe has been proactive in trying to identify areas requiring its intervention. A number of anti-competitive cases have already been investigated and included using this proactive approach to competition concerns. The Commission is also planning to play its advocacy role in full by lobbying government for competition-enhancing policies m areas such as privatization and removal of entry barriers. |
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