Africa needs stronger competition to end hunger

The extreme concentration of food and agricultural market harms small producers, informal businesses, and consumers. In Africa, it is an overlooked force driving up food insecurity and poverty. Competition laws and policies need urgent reform to empower small agricultural businesses and farmers and enable a transition towards more inclusive and sustainable agri-food systems.

The report uncovers three main problems:

1. From input to retail, markets are concentrated and present high barriers to entry for SMEs, leading to harmful cartels.

These cartels are widespread and cross-border, as demonstrated in this report through the examples of fertilizers, seeds, and poultry (see video below).

Anti-competitive conduct and concentrated market power in Africa allows large, vertically integrated companies to earn excessive margins. Farmers receive reduced prices and customers pay inflated prices. For example:

Three out of the five leading fertilizer companies operating in 24 countries across Africa have been involved in cartels and increasing prices to farmers (World Bank).
Soybean traders increased their feed prices up to 91% more than producer prices (African Market Observatory)

2. Large parts of Africa lack national competition laws and institutions

The report reviews the state of competition laws, policies, and institutions in the 48 Sub-Saharan
African countries using three indicators: existence of competition laws, state of institutions, and enforcement history

Nearly half of the countries in Sub-Saharan Africa - 22 out of 48 - do not have national competition laws or institutions in place (in orange).

A third of the countries have laws and institutions that are less than 10 years old (in blue).

Only 9 countries have established institutions with strong enforcement history and capacity (in green).

3. African countries lack the resources, data and political support necessary to effectively prevent anti-competitive conduct in agri-food markets.

African competition authorities have blocked very few mergers, even in countries with the necessary power to review them.

Cartel behaviour has been even more difficult to prevent. Authorities often lack the specialized investigative powers needed such as search, seizure, and interrogations.

In developing countries, and specifically in Africa, the competition landscape is challenging because markets are typically smaller and less developed while the costs to entry are often prohibitively high for small producers and MSMEs.

Regional economic communities play a catalytic role in tackling regional anti-competitive conduct, given the cross-border nature of much of the anti-competitive conduct. Regional competition regimes require reform and strengthening for effective enforcement alongside national authorities and as part of the wider effort to build more effective rules and institutions under the African Continental Free Trade Area (AfCFTA).

The report proposes five areas for action and reform. They are:

1.

Urgently scale-up support to the nine mature African competition authorities to enable them to act against anti-competitive behaviour.

This can be done through technical and legal assistance with market inquiries, cases, and ex-post merger reviews, as well as through the development of a common knowledge base such as a market observatory tool.

Build the capabilities of the young African competition authorities.

This can be achieved through learning and exchanges with the mature authorities, support for enforcement, and improve the availability of data and analysis on market conduct.

2.

3.

Prioritize regional African institutions and enforcement to build a continent-wide response.

Better coordination and cooperation between regional competition authorities, like COMESA and WAEMU, as well as with national authorities will ensure that cross-border anti-competitive conduct is regulated.

Mobilize political support among affected constituencies in the country, such as farmers’ cooperatives, associations of SMEs, and consumer groups.

This can be achieved through targeted support for authorities in the form of advocacy campaigns led by, or in collaboration with, other stakeholders to build political support for action.

4.

5.

Introduce and reform existing laws, policies, and institutions in the longer term to ensure flexible and responsive national and regional competition regimes.

These national and regional competition regimes should be rules-based, keep abreast of developments in markets and technology, and implement effective institutions with the authority to prepare and enforce orders.

Read our full report here: