BARRIERS TO ENTRY
Barriers to entry, by creating and reinforcing the market power of large firms, tend to lead to higher prices, lower levels of innovation and a less competitive economy. In a country like South Africa where there are significant challenges of unemployment, poverty and inequality, it is critical to understand the nature and extent of barriers to entry in the economy, in order to ensure that regulatory and policy interventions have a meaningful impact on creating inclusive and shared growth.
For this reason, CCRED conducted a programme of research focused on barriers to entry and inclusive growth, the project was funded by the National Treasury. The project involved researching and analysing the barriers to entry across a range of sectors in South Africa and in the region with the intention of formulating policy recommendations that will help to facilitate greater levels of entry and competition and thus drive higher growth.
Firm entry case studies
- Study on Barriers to Entry in Liquid Fuel Distribution in South Africa
- Competition, barriers to entry and inclusive growth - Soweto Gold Case Study
- Competition, barriers to entry and inclusive growth - Retail Banking - Capitec Case Study
- Competition, barriers to entry and inclusive growth - Fruit and Veg City Case Study
- Competition, barriers to entry and inclusive growth - 1Time and FlySafair Case Study
Sector case studies
- Competition, barriers to entry and inclusive growth - Telecommunications Sector Study
- Competition, barriers to entry and inclusive growth - Agro-processing
- An Agenda for Opening up the South African Economy: Lessons from Studies of Barriers to Entry
- POLICY BRIEF: Barriers to entry for black industrialists - the case of Soweto Gold’s entry into beer
- POLICY BRIEF: Barriers to entry in banking, lessons from Capitec’s experience
- POLICY BRIEF: Barriers to entry in supermarkets
- POLICY BRIEF: Barriers to entry in telecoms
- POLICY BRIEF: Barriers to entry and inclusive growth: policy recommendations for agro-processing
INDUSTRIAL DEVELOPMENT RESEARCH PROGRAMME (IDRP)
This research forms part of the Industrial Development Research Project (IDRP) Research Stream 1 which focuses on assessing the impact and effectiveness of government interventions for industrialisation. The orientation and interests of large firms are at the heart of how countries develop. However, the decisions, strategies and responsiveness of firms to government interventions for industrialisation are poorly understood in the South African context.
This research will focus on studying large firms and developing a system for regular tracking of their strategies and decisions. The identification of large, lead and dynamic firms (LLDs) within sectors, and the ability to engage with capabilities and points of leverage in relation to these firms, is a key priority for the dti. As such the main areas of work forming part of this research include:
- Development of a system to track the strategies of large private and public firms that report in the public domain, which will be extended over time to major unlisted private firms. This tracking will include ongoing developments with respect to corporate structure, shareholding, strategy, investment and procurement decisions. A template for quarterly reports for each sector will be developed. As part of this, the supermarket sector will be evaluated.
- In-depth assessment of the main conglomerates and the large firms in critical sectors (for instance, agro-processing or construction) including unlisted companies and medium to large firms and recent entrants. This will involve a critical engagement with how their dynamism and strategic positioning in the South African economy can be understood. This will provide insights to improve the tracking system.
- A review of the influence of different hard and soft policy levers on the behaviour of large firms, drawing across the sector studies (identified above and others) and including a critical engagement with the global value chain literature on the role of large and internationalised firms (not necessarily dynamic) in controlling production and supply across countries.
- Mapping of African multinationals and consideration of implications for industrial policy. This will draw from the analysis of the key sectors as well as through examining the growth of businesses in southern and East Africa.
In the first year, the focus is on the development of a system to track strategies of lead firms and a review of the influence of hard and soft policy levers; assessment of supermarkets as large and lead firms, including the impact of supermarkets on supply chains, supplier development initiatives and soft policy interventions; and the initial mapping of African multinationals and consideration of implications for industrial policy.
The second year will involve in-depth assessment of the main conglomerates and the large firms in selected sectors (e.g. agro-processing, construction); and year three focuses on in-depth mapping of African multinationals and consideration of the implications for regional industrial policy (e.g. across East and southern Africa).
Look out for our working papers, briefing papers and workshops which will appear on this page as the project progresses.