Competition & Barriers to Entry, Regulation, and Inequality

Across Southern and Eastern Africa (ESA), many industries and sectors remain highly concentrated and uncompetitive, characterised by high barriers to entry and ineffective regulations harming consumer welfare and increasing inequality. 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 while increasing inequality. As a leading competition economics centre on the continent, CCRED conducts research and provides expert advice to authorities on competition and economic regulation, barriers to entry, and inequality.  Through partnerships with competition authorities and regulators in the ESA region, CCRED conducts in-depth research to identify concentration, market power, competition bottlenecks and barriers to entry.  The in-depth research provides the foundation for creating tailored, evidence-based interventions that foster competitive, resilient and inclusive regional value chains with lower barriers to entry.

Key projects under this pillar include:

• Zambia Commercial Broiler Market Inquiry (2025),

• Kenya Animal Feed Inquiry (2024),

• Competition issues in soybean to poultry markets in Tanzania (2024),

• The state of competition in Tanzania’s fertilizer markets (2024),

• Concentration, market structure and barriers to entry in the vegetable oil value chain in East and Southern Africa (2022-2023),

• Competition, concentration, and market outcomes in fertiliser markets in East and Southern Africa (2022-2023).

These projects generated valuable insights on the regional competitive dynamics and concentration issues.

Key projects

Shamba Centre for Food and Climate

CCRED has an ongoing partnership with the Shamba Centre for Food and Climate (Shamba). Shamba provided funding for CCRED to support the Competition Authority of Kenya and the Competition and Consumer Protection Commission of Zambia in conducting two market inquiries. The Kenya market inquiry focused on Animal Feed while the Zambia inquiry focused on the Commercial Broiler Poultry Market. Drawing from extensive information on inputs, prices, costs and contracts provided by market participants and using publicly available data, the inquiries produced two reports. The reports contained actionable recommendations aimed at fostering competition, improving regional trade and unlocking the potential for value and employment creation.

German Federal Ministry for Economic Cooperation and Development

Through the ongoing partnership between Shamba and CCRED, we received funding from the German Federal Ministry for Economic Development, focusing on making markets work for African enterprise through competition law and economic policy. CCRED’s research under this area of work is to improve the knowledge and capacity of African competition regulators to enforce competition policy in a way that ensures agri-food markets are open and transparent, deliver fair prices and promote innovation for producers and consumers. This includes capacity building, legal and economic advisory to support competition authorities to enforce competition laws and policies.

German Federal Ministry for Economic Cooperation and Development and supported the by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ)

The African Market Observatory (AMO), an initiative housed at CCRED was funded by the German Federal Ministry for Economic Cooperation and Development and supported by GIZ to conduct research in Tanzania focusing on soybeans to poultry markets and fertilizer markets in Tanzania. The research was conducted with support from the Tanzania Fair Competition Commission. Drawing on publicly available trade and production data, information from the AMO and  semi-structured interviews conducted in Tanzania, the project produced two working papers: Competition issues in soybean to poultry markets in Tanzania and The state of competition in Tanzania’s fertilizer markets. The working papers contained valuable insights accompanied by actionable insights aimed at fostering competition, improving integration of regional markets, removing barriers to entry and trade and ongoing tracking of prices, amongst others.

COMESA Competition Commission

The AMO has an ongoing partnership with the COMESA Competition Commission (CCC) which includes collaboration on research and providing expert advice. Several collaborative research projects have been undertaken under this partnership including providing expert advice to the CCC and national authorities.  Through this partnership, the CCC funded a research project focusing on fertilizer and vegetable oils markets in seven COMESA member states, that is Kenya, Rwanda, Uganda, Malawi, Zambia, Zimbabwe and the Democratic Republic of Congo. Drawing on publicly available trade and production data, information from the AMO and  semi-structured interviews in the seven COMESA member states, the project produced two working papers: Concentration, market structure and barriers to entry in the vegetable oil value chain in East and Southern Africa and Competition, concentration, and market outcomes in fertiliser markets in East and Southern Africa. The project produced actionable recommendations aimed at fostering regional trade and developing the regional value chains, increasing competition to expand agriculture, reducing barriers to entry and ongoing tracking of prices, amongst others.

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.

Review papers

1. Key debates in competition, capabilities development and related policies: Drawing the link between barriers to entry and inclusive growth

2. The links between competition policy, regulatory policy and trade and industrial policies

Firm entry case studies

1. Study on Barriers to Entry in Liquid Fuel Distribution in South Africa

2. Competition, barriers to entry and inclusive growth - Soweto Gold Case Study

3. Competition, barriers to entry and inclusive growth - Retail Banking - Capitec Case Study

4. Competition, barriers to entry and inclusive growth - Fruit and Veg City Case Study

5. Competition, barriers to entry and inclusive growth - 1Time and FlySafair Case Study

Sector case studies

1. Competition, barriers to entry and inclusive growth - Telecommunications Sector Study

2. Competition, barriers to entry and inclusive growth - Agro-processing

Policy briefs

1. An Agenda for Opening up the South African Economy: Lessons from Studies of Barriers to Entry

2. Barriers to entry for black industrialists - the case of Soweto Gold’s entry into beer

3. Barriers to entry in banking, lessons from Capitec’s experience

4. Barriers to entry in supermarkets

5. Barriers to entry in telecoms

6. Barriers to entry and inclusive growth: policy recommendations for agro-processing

Comments on legislation and guidelines