Assessing impacts of competition – experience from ODI research Karen Ellis Head of Private Sector...

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Assessing impacts of competition – experience from ODI research Karen Ellis Head of Private Sector & Markets Programme, ODI

Transcript of Assessing impacts of competition – experience from ODI research Karen Ellis Head of Private Sector...

Page 1: Assessing impacts of competition – experience from ODI research Karen Ellis Head of Private Sector & Markets Programme, ODI.

Assessing impacts of competition – experience

from ODI researchKaren Ellis

Head of Private Sector & Markets Programme, ODI

Page 2: Assessing impacts of competition – experience from ODI research Karen Ellis Head of Private Sector & Markets Programme, ODI.

Project assessing economic impact of

competition and related policy

Policy context &market environment

Degree of competition

Market outcomes

Page 3: Assessing impacts of competition – experience from ODI research Karen Ellis Head of Private Sector & Markets Programme, ODI.

Countries and markets analysed

Countries:

• Bangladesh• Vietnam• Ghana• Kenya• Zambia

Markets:

• Sugar• Cement• Mobile phones• Beer

Page 4: Assessing impacts of competition – experience from ODI research Karen Ellis Head of Private Sector & Markets Programme, ODI.

The sugar market

Country Number of firms (sugar mills / refiners)

State ownership

Market shares of leading firm

Imports as % domestic consumption

Kenya 8 Yes, the state owns nearly all mills

54% (firm with most private sector participation)

15%

Zambia 3 No 93% 0%

Ghana 0 N/A N/A 100%

Vietnam 40 Yes, high degree of state ownership

9% 4%

Bangladesh 16 SOE mills & 4 private refiners

Yes, State owns nearly all mills

47% 10%

Page 5: Assessing impacts of competition – experience from ODI research Karen Ellis Head of Private Sector & Markets Programme, ODI.

Comparing efficiency

Average sugar production (tonnes produced per hectare of sugar

grown)

1

1.4

5

15.3

0 5 10 15 20

Kenya

Bangladesh

Vietnam

Zambia

Page 6: Assessing impacts of competition – experience from ODI research Karen Ellis Head of Private Sector & Markets Programme, ODI.

Sugar Retail Price (USD)/kg at PPP rates

(2007 figures)

Page 7: Assessing impacts of competition – experience from ODI research Karen Ellis Head of Private Sector & Markets Programme, ODI.

Cement market structure

Country Number of firms

State Ownership

Estimated market

shares of leading firm

Head of population

(millions) per cement

company

Kenya 3, but with joint ownership

1 SOE 65% 13.6

Zambia 3 No 85% 4.42

Ghana 2 No 64% 12.2

Vietnam 90

33 SOEs 40% 0.99

Bangladesh 34 1 SOE 12% 4.8

Page 8: Assessing impacts of competition – experience from ODI research Karen Ellis Head of Private Sector & Markets Programme, ODI.

Retail Cement Price Per 50kg Bag (in US$) , 2007/8

figures

Page 9: Assessing impacts of competition – experience from ODI research Karen Ellis Head of Private Sector & Markets Programme, ODI.

Cement: percentage change in price between

2007 and 2010

Page 10: Assessing impacts of competition – experience from ODI research Karen Ellis Head of Private Sector & Markets Programme, ODI.

Mobile telecoms benefits

Page 11: Assessing impacts of competition – experience from ODI research Karen Ellis Head of Private Sector & Markets Programme, ODI.

Mobiles marketAverage per minute

mobile tariff (2007 figures in USD)

Page 12: Assessing impacts of competition – experience from ODI research Karen Ellis Head of Private Sector & Markets Programme, ODI.

Zambia´s International Gateway Problem

• Only one international gateway exchange operated by monopoly

• State charged v. high price for international gateway licence

• $18 million, compared to $214,000 in Kenya & $50,000 in Uganda

• Drove up prices and distorted whole mobiles market, increasing the costs of doing business in the country.

Page 13: Assessing impacts of competition – experience from ODI research Karen Ellis Head of Private Sector & Markets Programme, ODI.

Peak rate 1 minute call to the USA in 2007

Page 14: Assessing impacts of competition – experience from ODI research Karen Ellis Head of Private Sector & Markets Programme, ODI.

Average per minute mobile tariff (2007 figures in USD)

Page 15: Assessing impacts of competition – experience from ODI research Karen Ellis Head of Private Sector & Markets Programme, ODI.

Director for Mergers and Monopolies at the Zambian Competition Commission:

‘Many times it becomes very difficult to actually show the benefits. Of course, a report like this makes it much easier to advocate to the government. With our persistence, we kept going to the government and highlighting the benefits of competition, showing them the statistics as such a report has done. And eventually we have gotten through to the government. And the fee for the international gateway has fallen ...’

Page 16: Assessing impacts of competition – experience from ODI research Karen Ellis Head of Private Sector & Markets Programme, ODI.

The Impact

• June 2010, Govt reduced license fee to $350,000

• Licences awarded to the 2 private operators

• Within 1 month, both private operators reduced international tariffs by 40-80%

• “I think it’s a huge benefit to the Zambian consumers and also to the business community.” (Director of Regulation, ZICTA)