Here is an overview of previous projects at CCRED
1. Barriers to Entry
It is evident that the market power of large firms, whether exerted unilaterally or through coordination with each other, harms economic development and low income groups. Such power means higher prices for goods and services and distorts the development path of economies where it relates to the pricing of important inputs. The recent work of the South African competition authorities has highlighted the extent of such arrangements and the regional and international scope that many take. For example, cartels have operated across southern Africa in cement, concrete products and fertilizer.
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 is conducting a programme of research focused on barriers to entry and inclusive growth. The project involves 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.
The study is divided into three parts:
Part A consists of a desktop review paper aimed at locating the study in terms of key international development and growth literature as well as the South African policy and institutional context.
Part B involves a series of firm entry case studies including both successful entrants, as well as those that have failed. Those that have entered provide insights into the obstacles they had to overcome (including possible anti-competitive conduct), and the capabilities required. The case studies focus on firms from a range of sectors from both South Africa and the region.
Part C entails a review of competition and regulation in key sectors. This includes assessing outcomes in key competition cases and the application of regulatory frameworks to understand the appropriate links between competition, regulatory frameworks and policies at the sector and market level and the impact of this on barriers to entry and growth.
The core output of the programme is the development of a knowledge base and research capacity. A strong emphasis in the research is that it will contribute to practical steps to build institutions and improve policy formulation and implementation.
Look out for our working papers, briefing papers and workshops which will appear on this page as the project progresses.
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
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
2. Study of Competition in the Road Freight Sector of the SADC Region
The project was undertaken for the Southern African Development Community (SADC), funded by the Deutsche Gesellschaft fur Internationale Zusammenarbeit (GIZ).
Improving outcomes in the transport sector is one of the pillars of the current round of SADC Protocol negotiations. In this context, this research study assesses the extent and dynamics of competition in road freight, including the links with freight companies, industry associations and trading operations. To assess the impact of arrangements in road freight on a key sector, the study focuses on fertiliser trading and transportation across Zambia, Tanzania and Malawi.
The research study examines the implications of obstructions to entry in road freight and fertiliser trading, both from a competition and regulatory perspective, on the costs of fertilisers in Zambia, Malawi and Tanzania, as well as possible coordinated conduct. The possible and actual interventions of competition authorities are also evaluated.
Road freight as an integral part of logistics services and the fertiliser value chain covering importers, transport operators, distributors, freight forwarders, customs and border agencies, and shippers. The study therefore considers measures to improve the efficiency of intermodal transportation systems including the diminished role of rail transport as well as the relationship of anti-competitive arrangements in transportation and trading with policies to distribute subsidised fertiliser to farmers, in Zambia, Malawi and Tanzania.
The research involves a desktop review of existing studies, collation of publicly available data, and interviews with key industry participants and stakeholders in each country. It is envisaged that the research will provide useful insights for policy makers and regional economic communities to improve the competitive outcomes in the road transportation sector which has important implications for trade across the region.
3. Plastic Converters Strategy
The project was undertaken for the Department of Trade and Industry to assist in developing the plastics conversion sector strategy, including identifying relevant growth sub-sectors. The plastics sector is in many ways representative of the diversified manufacturing industry in which growth is necessary as part of broader-based economic development.
The plastics sector is a good representative of the medium technology, light manufacturing in which South Africa ought to be growing as a middle income country with relatively good infrastructure and the urgent need to grow labour absorbing activities. As we explain below, the plastics sector performance has been far below what is required if South Africa is to grow, diversify the industrial base and create employment.
4. The Regulatory Entities Capacity Building Project
This project is result of a unique partnership between the Economic Development Department and the University of Johannesburg. The project aims to build the capacity of regulators through the design and implementation of a series of capacity building measures to support economic regulators in South Africa. The Centre for Competition, Regulation and Economic Development (CCRED) in the Faculty of Economic and Financial Sciences is responsible for implementing the project.
The project recognises the critical role that regulators play in the development of an economy through setting and monitoring rules for the conduct of companies with substantial market power. The effective functioning of regulators can thus influence development in particular economic sectors. Read more in the background paper.
The project involves a review of the performance of the economic regulators, identification of constraints impacting their performance and the design and implementation of capacity development programme in response to identified needs.
A key starting point for this project is to review and improve the capacity of the regulators. The project goals are as follows:
- The first phase of the project involves engaging with the regulators to identify what the needs and gaps are, review their performance in the wider context of the country’s economic policies and development challenges, and make recommendations on what support is required.
- The second phase will focus on implementing the recommendations and supporting the capacity improvement of the regulators via appropriate on-going training and a forum for regulator collaboration and engagement.
A range of partnerships have been established to support the implementation of the project. Partnerships provide a way in which to leverage the resources, expertise and networks of partner institutions. Significant partnerships include the collaboration with TIPS and the National Energy Regulator of South Africa (NERSA). TIPS is a specialist economic research and analysis institution that will partner with CCRED to undertake sector reviews in the electricity and ports sectors. A strategic partnership has been established with NERSA to host the conference for economic regulators.
THE PROJECT HAS FIVE MAJOR WORK AREAS, INCLUDING:
Capacity Needs Assessment – the capacity building needs of economic regulators will be determined through a stakeholder engagement process and a review of key issues pertaining to regulation and economic policy.
Performance Review – this involves a review of the outcomes related to the development of the economy, as well as a comprehensive review of the regulators’ role, linked with the policy framework and powers in selected sectors.
Learning Programmes – the delivery of short learning programmes in financial analysis and economic regulation; regulatory law; regulatory economics; and strategic planning and knowledge management for regulatory entities.
Seminars and a Conference – a series of seminars targeting policy makers, regulators, researchers and practitioners will be arranged to facilitate the sharing of observations, analyses and insights. The project activities will culminate in the hosting of a conference to provide the intellectual space in which to debate issues, problems, risks and opportunities relating to the role of regulation in economic development.
REVIEW OF REGULATORY ORIENTATION AND PERFORMANCE
Three sector studies were conducted to review the outcomes and links with the development of the economy, as well as a comprehensive review of the regulators’ role, linked to their policy frameworks and powers. These sectors were energy, transport and telecommunications. Within each sector, the studies carried out included:
- Review of Regulation in the Electricity Supply Industry
- Review of the Renewable Energy Sector Regulatory Framework in South Africa
- Review of the Freight Rail Sector
- Review of Regulation in the Ports Sector
- Review on Economic Regulation of Liquid Fuels and Related Products
- Review of Economic Regulation of the Telecommunications Sector
In addition, four case studies explore the impact of regulatory decisions related to a specific market, product or service:
- Review of the Competition Commission Banking Enquiry
- Regulating Radio-frequency Spectrum for the Digital Economy
- The Construction Industry Development Board and the Construction Cartels
- A Review of the International Trade Administration Commission’s Tariff Investigation Role
5. Regional Industrialisation Project
The project, funded by the Department of Trade and Industry, aims to investigate the nature of regional industrial development. The proposed research encompasses two key elements: the canvassing of existing research within regional research partners including in Zambia, Zimbabwe and Mozambique, and three investigative case studies that seek to explore some of the key constraints and drivers of regional growth from different sector perspectives. The case studies are undertaken in collaboration with Corporate Strategy and Industrial Development (CSID, WITS) and Trade and Industrial Policy Strategies (TIPS).
The importance of exploring the patterns, drivers, constraints and potential of regional industrial development has been recognised and the following three case studies are underway as part of this:
Case Study 1: Transport infrastructure value chain in South Africa and Mozambique
Case Study 2: Capital Equipment with a special focus on the Zambian copper-belt
Case Study 3: Seed-oil value chain in Zambia, Zimbabwe and South Africa
Synthesis report: Key findings from case studies of mining capital equipment, infrastructure inputs and soy agro-processing in Southern Africa and implications for regional industrial development agenda
The three case studies form the starting point for a broader investigation into the current status and future potential of key areas of regional industrial development in the Sub-Saharan African area. The exploration in each case study comprises the mapping of existing work on patterns of regional development in infrastructure, capital equipment and agribusiness; documenting the nature of the industrial activity (inputs, supply chains, forms of competition, local and regional competitiveness, how the region is inserted in global value chains for construction value chain, capital equipment and seed-oil); investigating the nature of regional linkages and value chain dynamics; exploring the current and potential role of industrial policy at national level and identifying scope for cooperation in the development of both regional industrial activities as well as regional industrial policy.
6. Growth promotion through industrial strategies - ZAMBIA
This project, commissioned by the International Growth Centre (IGC, based in the London School of Economics and Political Science in partnership with the University of Oxford) assesses the current and potential opportunities for industrial development in Zambia. The study analyses trends and patterns in industrial performance over time, as well as industry-level capabilities and competitiveness. It undertakes a broad scoping of high potential sub-sectors in Zambia, with particular attention to resource-based industries and regional markets. It provides a review of the policy framework for industrial development, including sector-specific strategies, implementation aspects and institutional setting. On the basis of data analysis and interviews, the paper identifies several areas of untapped, substantial opportunities for Zambia’s manufacturing sector, particularly in agro-processing and engineering products subsectors.
Project paper: Growth promotion through industrial strategies - ZAMBIA
7. Regional Growth and Development in Southern Africa
The United Nations University World Institute for Development Economics Research (UNUWIDER) commissioned the Centre for Competition, Regulation and Economic Development (CCRED) of the University of Johannesburg to conduct research on Regional Growth in Southern Africa. Four studies will be conducted under this project. The four activities are:
- The development of the animal feed to poultry value chain across Mozambique, South Africa, Zambia and Zimbabwe.
- The expansion of regional supermarket chains changing models of purchasing, and its implications for supplier capabilities in Botswana, Mozambique, South Africa, Zambia and Zimbabwe.
- Mining inputs and the development of capabilities in machinery and engineering services: technical capabilities, skills and local content across Mozambique, South Africa, Zambia and Zimbabwe.
- Understanding intra-regional transport: competition dynamics in the road transportation of diversified products between Malawi, Mozambique, Zambia, Zimbabwe and South Africa.
The starting point of the research in each of the areas is to understand the relationships with the regional growth potential, evaluating where there are constraints which can be addressed, across and within countries, and where the research is likely to identify gains to several countries that can be expressed in tangible terms. Understanding the drivers of growth in the region includes understanding firm- and industry-level capabilities and competitiveness. While the methodology varies depending on the study, it will generally involve detailed assessment of market structure, costs, pricing, influence of the policy framework, inter-firm linkages, key interests and firm strategies.
CCRED expects to collaborate in these studies with other research institutes in countries including Mozambique, Zambia and Zimbabwe.
8. MOBILE MONEY SECTOR
The Financial Services for the Poor (FSP) team at the Bill and Melinda Gates Foundation commissioned a study to assess the effects of the competition dynamics in the mobile money market in a series of countries. The FSP was interested in understanding how anti-competitive dynamics in digital financial ecosystems play out in developing countries in order to lay out a blue print or strategy for FSP, other donors, regulators and other partners to help foster competition, in a way that doesn't stall market growth and maximizes customer welfare. Despite some early success, many markets remain slow to ignite. Due to the large expense, high risk and complexity involved in starting mobile money operations, the industry is highly concentrated with a few large players. This dynamic often reduces incentives for the dominant firm to lower prices or innovate and could affect adoption of the services and extent of the services used.
The following study will therefore assess the implications of the regulatory regime and competition bottlenecks for the development of mobile money markets in Tanzania, Uganda and Zimbabwe. The core objective of this assignment is to provide the Financial Services for the Poor (FSP) team at the Foundation with an analytical and strategic review and comparative analysis of competition and regulation issues in mobile money in developing countries through case studies of the selected countries.
9. PROVINCIAL DEVELOPMENT FINANCE INSTITUTIONS (PDFIS)
National Treasury (Assets & Liabilities) requested Government Technical Advisory Centre (GTAC)’s support to conduct an in-depth review of the Provincial Development Finance Institutions (PDFIs). The PDFI review has its genesis in a request by Cabinet that National Treasury should undertake a review of the mandates of South Africa’s Development Finance Institutions (DFIs). The initial review only focused on the National Development Finance Institutions (NDFIs) and it was felt that changes to the development finance system (DFS) should not be considered before PDFIs were reviewed. So In order to introduce a more coherent and coordinated DFS a review of provincial DFIs is necessary. The relevant eight PDFIs for the review include:
- Eastern Cape Development Corporation (ECDC),
- Eastern Cape Rural Development Agency (ECRDA),
- Free State Development Corporation (FDC),
- Gauteng Economic Propeller (GEP),
- Ithala Development Finance Corporation (IDFC or “Ithala”),
- Limpopo Economic Development Agency (LEDA),
- Mpumalanga Economic Growth Agency (MEGA), and
- North West Development Corporation (NWDC).
The review covered the following six key areas:
1. Mandate of the PDFIs
2. Corporate governance and regulatory environment
3. Risk management within the PDFIs
4. Developmental effectiveness of the PDFIs
5. Funding models and financial stability of the PDFIs
6. Organisational and institutional arrangements
The information gathered from this review is expected to feed into the finalisation of South Africa’s DFI policy and the development of relevant legislation.
10. TOWARDS AN UNDERSTANDING OF THE ECONOMY OF JOHANNESBURG
The Department of Economic Development (DED) at the City of Johannesburg (CoJ) is concerned with economic development and transformation in Johannesburg. The character of economic activity in Johannesburg has been shifting over time; away from primary and secondary sectors and towards services. Economic activity is very unevenly spread across the city and not well aligned with areas where the majority of the population live. Furthermore, the challenges of poverty, unemployment and inequality are acute.
The CoJ recognizes the need to increase competitive local production as a basis for exports, jobs, and sustainable services growth. The CoJ has commissioned the CCRED to undertake firm level surveys in specific industrial nodes with a view to collecting and analysing primary data on patterns of economic development and performance at the firm level in order to understand constraints to entry, growth, and employment creation. This will enable CoJ to design interventions that will most effectively stimulate dynamism and growth in the economy going forward. Furthermore, the project seeks to provide a deeper understanding of the economy of Johannesburg and the ways in which CoJ can best use the tools at its disposal to drive the city towards an inclusive, job-intensive, resilient and competitive economy. The key areas of work are as follows:
• Key trends that impact on the city and comparison with other cities
• Understanding industry in the city – a survey of two industrial areas
• Economies of agglomeration in the ICT and broadcasting sectors
11. GDED SECTOR STUDIES AND STRATEGIES (2016-2019)
The Gauteng Department of Economic Development (GDED) has requested the Centre for Competition, Regulation and Economic Development (CCRED), in collaboration with Benchmarking and Manufacturing Analysts South Africa (Pty) Ltd (B&M Analysts), to conduct a research study on six sectors in Gauteng province. The six sectors are capital equipment and machinery, plastics and chemicals, automotive, furniture, food and beverages, and Information and Communications Technology (ICT). Conducting the research study requires CCRED and B&M Analysts to undertake sector studies and develop sector strategies.
The aim of the research study is to provide a sector profile for each of the identified sectors and determine the capacity, growth potential and development needs of the Gauteng province. The province is concerned with deindustrialisation and recognises the need to increase competitive local production as a basis for exports, jobs, and sustainable services growth. The core objective of the sector studies is to provide GDED with concrete and implementable support measures that could be used to promote industrial development in the province. Moreover, the sector studies are expected to demonstrate linkages to the Gauteng City Region pillars of reindustrialisation, transformation and job creation.