Boosting Competition in African Markets Can Enhance Growth

August 27, 2016— Boosting competition in consumer markets and key input sectors can help African countries grow faster and alleviate poverty, according to a report launched today by the World Bank Group and the African Competition Forum (ACF). The report, Breaking Down Barriers, finds that reducing the prices of basic food staples by just 10%, as a result of tackling cartels and improving regulations that limit competition in food markets, could lift nearly half a million people in Kenya, South Africa and Zambia alone out of poverty and save households in these countries over US$700 million a year. At the same time, fundamental market reforms to increase competition in key sectors is critical for competitiveness and economic growth.

For example, if countries like Ethiopia, Ghana, Zambia and others were to reform their professional services markets, this could generate nearly half a percentage point in GDP growth from industries which use these services intensively. For a country like Zambia, which had 1.7% GDP growth in 2015, this can be significant.

The report also suggests that the impact would be even larger if fundamental reforms were implemented in other services such as electricity, telecommunications, and transport which have higher spillover potential across economies. “Strengthened competition policy in Africa not only encourages sustainable economic growth and competitiveness across the continent by creating firms and industries that are more productive, it directly impacts poverty by encouraging firms to deliver the best deals to consumers – particularly the poor -- protecting them from paying higher prices for essential goods and services,” said Anabel Gonzalez, Senior Director of the World Bank Group’s Trade & Competitiveness Global Practice. Sub-Saharan and North African countries have relatively low levels of competition. More than 70% of African countries rank in the bottom half of countries globally on the perceived intensity of local competition and on the existence of fundamentals for market-based competition.