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Opinions of Saturday, 13 February 2016

Columnist: Adomako, Appiah Kusi

The role of competition policy in the attainment of sustainable development goals

By Appiah Kusi Adomako

The UN Millennium Development Goals (MDGs) which were adopted in 2000, have now been replaced by fairly ambitious 17 Sustainable Development Goals (SDGs), to be achieved by 2030. There has been progress made by developing countries towards the achievement of the MDGs, especially against poverty, hunger, and disease. In addition, they have remained a focus of global policy debates, becoming incorporated into the work of both state and non-state actors. However, there are also significant challenges in attainment of the goals, as the progress is highly variable across goals, countries, and regions. Some of the MDGs have not been achieved, including promises of official development assistance by rich countries, which have not been kept, argues, Jeffrey Sachs. Maternal health and sanitation objectives were also mostly not realized.

With the recent adoption of the SDGs, it is critical to ensure that all of the useful tools that can be used towards their attainment be fully understood. While general economic policies, which include fiscal and monetary policies, are expected to be pivotal in the attainment of the SDGs, they should also be complimented by other policies that are relevant for the attainment of the SDGs.

As an advocate of competition reforms across the developing world, CUTS has maintained that competition reforms can help countries meet some of their key developmental objectives. CUTS believe that a discussion on the linkage between Competition Policy and Sustainable Development is opportune now, and will contribute to the discussion on implementation of the Sustainable Development Agenda. Further, CUTS considers that establishing this linkage would provide considerable impetus towards mobilising greater attention of both the international community and national policymakers on competition reforms as a means for achieving some of these SDGs.
On the empirical side, CUTS has also demonstrated through the CREW Project and COMPAD Project how competition reforms leads to producer and consumer welfare.
It is clear to understand that the attainment of these noble goals will requires creating the enabling business environment that would bring about inclusive growth and sustainable development.
The objective of a functional competition regime is to promote competition, and contribute towards increased efficiency and curb anti-competitive practices in the market. It aims to ensure wider consumer choice in markets for goods and services, through innovation and efficient resource use by players in the market to promote economic welfare. Further, it endeavours to stimulate effective price competition between suppliers, and deter anti-competitive behaviour, which helps consumers of good and services. If passed and implemented effectively, empirical evidence and country experience suggests that an effective competition regime can promote private sector development, economic growth and poverty reduction in both developing and least developed countries. Several studies have corroborated this hypothesis, and the understanding motivated a large number of countries from Africa and Asia to embrace competition law/policy in the last decade or so. Eminent economist like Nobel Laureate Joseph Stiglitz (2001) asserts that, “Strong competition policy is not just a luxury to be enjoyed by rich countries, but a real necessity for those striving to create democratic market economies”.

Competition Policy and the SDG

The first SDG is to end poverty in all its forms everywhere followed by the second, end hunger, achieve food security and improved nutrition, and the third, promote sustainable agriculture and Ensure healthy lives and promote wellbeing for all at all ages. The first three of the SDG are interrelated. If poverty is addressed, it means that the poor and vulnerable will have the means to cater for their primary needs. Once the poor and vulnerable get access to a thriving economic activity either through working or government direct cash transfer, there will be money to take care of food and other nutritional needs. Once there is a good nutrition, good health a by-product. Malnutrition and starvation will be out of the question.

Achieving these threefold linkages require financial resources. Whether the funds come through government direct cash transfer or payroll income, the button line is that there must be some form of economic activity where the government or the state must generate some taxes to pay for these.

Fair and competitive market creates opportunities unlike an economy which is characterized only by monopoly and/or restrictive policies. In a fair and competitive market, firms and business work hard to win the heart of consumers through product innovation and price reduction. Technology results in innovation and innovation results in efficient ways and means of doing things. As results of disruptive technology –the mobile phone, lots of people whom ordinarily would not have been to even hold a fixed line to make and receive calls, can now make and receive calls with mobile phone.

About a year ago, an article appeared in the UK Guardian newspaper:
Africa's claim to be the "mobile continent" is even stronger than previously thought, with researchers predicting internet use on mobile phones will increase 20-fold in the next five years – double the rate of growth in the rest of the world. People in Africa use mobiles for online activities that others normally perform on laptops or desktop computers as the technology overcomes weak or non-existent landline infrastructure in large swaths of the world's poorest continent .

In Africa, even non- smart mobile phones are now being used to send and receive money from friends and loved ones whilst at the same time creating jobs and increasing tax revenue to the states.
Fair and competitive market ensures that entry barriers are removed to allow for new players in the market place. Prices of cement in Ghana have fairly become stable with the removal of entry barriers. It is now cheaper today to own and operate a mobile phone than it was a decade ago. If developing countries would restructure public utilities to allow for more competition, the entry of new players into the generation and distribution in the public utilities would result in increased efficiency and will bring prices down. In this regard, the poor and the marginalized, who hitherto could not enjoy it can now afford it. This will also ensure access to affordable, reliable, sustainable and modern energy for all (goal seven).

Competition results in efficiency in market which in turn increases both consumer and producer surpluses. In other words, there will be increased welfare again to all the players in the market. Fair and competitive market results in firms finding the best strategy for production in order to get the edge over the other competitor. Across the world economies that are doing well are largely the competitive ones. A fair market will

Promote sustained, inclusive and sustainable economic growth, full and productive employment, and decent work for all. (goal eight)
Build resilient infrastructure, promote inclusive and sustainable industrialisation, and foster innovation (goal nine)

Fair and competitive market is the way forward for the future. Certainly, Ghana as a country cannot remain passive in the scheme of things. The long awaited functional competition policy must be passed by Cabinet. Our failure to do this would means that we cannot remain competitive in the global market. We cannot drive foreign direct investment into our country. Investors are looking at countries were business environment is enabling and hard work is rewarded. And in the end, we will miss out in creating the “inclusive growth.”

*Appiah Kusi Adomako is the Country Coordinator for CUTS Ghana. CUTS Ghana is a policy think tank which works in the areas of consumer protection and education, economic regulation, trade and development, regional integration, competition policy and law, etc. For more information about CUTS, and competition policy and law | Office: +233-30-224-5652 | Email: apa@cuts.org, Website: http://www.cuts-international.org/ARC/accra