Maravi

State-owned companies shouldn't be exempted from competition law

State-owned companies shouldn't be exempted from competition law
By Kabanda Chulu
Friday January 11, 2008 [03:00]
Sampa calls for wider export base
By Florence Bupe
Friday January 11, 2008 [03:00]

FINANCIAL Markets Association president Miles Sampa has said Zambia needs to increase its export base in order to cushion the economy against the impact of the expected weak dollar this year. And Sampa said the expected weak dollar will lead to higher international oil prices, thereby adversely affecting Zambia’s economic growth. In an interview, Sampa said the country needed to enhance trade with countries other than the United States where there were stronger currencies.

“There is already talk of an economic recession in the United States, and this means there will be reduced global productivity,” Sampa explained. “In the short term, this means the US will import less copper, which is our major export, and the effects will eventually trickle down to Zambia.”

Sampa observed that the country was likely to realise less revenue from exports as a result of a weaker dollar on the global scene.

“Once the dollar depreciates, it will mean the country will not be able to earn as much from its exports. In order to mitigate the impact of the weakening dollar on the country’s economy, there is need for the country to increase its export base and reduce reliance on importation,” he said.

Sampa advised that government needed to substitute imports with local products, as well as enhance trade within the region. And Sampa projected that the weakening of the dollar would lead to further increases in the price of oil on the international market. The international oil price is currently US $100 per barrel.

Zambia’s main import is oil, which is also essential. The main oil producing region is the Middle East, and if the dollar weakens, the impact on Third World countries will be negative,” he said.
Sampa said the development could also work against a stable inflation rate, as the country would be importing inflation.

The World Bank early this week projected that the dollar would weaken, leading to reduced export revenues and capital inflows for developing countries, and reduce the value of their dollar investments abroad.

The bank stated that the reserves and other cushions that developing countries have built up in the past years might have to absorb unexpected shocks.

Director of the World Bank Development Prospects Group and International Trade Department Uri Dadush warned that the economic growth of developing countries might be slowed down by the dollar trends.

ZAMBIA Competition Commission (ZCC) has submitted draft proposals to government which recommend that state-owned companies should not be exempted from the competition law.

ZCC acting executive director Thula Kaira yesterday said the draft proposals would result in amending the 1994 competition and fair trading Act in order to make it more responsive to the challenges facing the Zambian market.

He said certain areas in the current Act were not clear hence the commission found it difficult to enforce the law.

“The position currently obtaining whereby the Act states that government must be exempted from the competition law must be stopped because it is not clear to what extent the exemption must be applied to public owned companies especially when these companies are dominant,” Kaira said. “The exemption clause in the Act is not clear, for example, Celtel can be punished for anti-competitive practices but it becomes difficult if similar cases are raised against Zamtel since it is government-owned and must be included in the exemption clause.”

Kaira said there was also need to have a competition and consumer tribunal to be put in place to ensure quick dispensation of cases.

He further noted that the consumer law was not adequate to protect people because it was too fragmented, resulting in higher cost of enforcement.

“Need has arisen to have law covering all sectors in order to ensure full protection for consumers because consumer rights are synonymous with human rights and another challenge is that the commission has no powers to punish offenders administratively through fines and penalties but just recommend to courts of law, which is costly to prosecute hence we are proposing the creation of a tribunal to arbitrate cases in a quick and fair manner,” said Kaira.

The draft proposals were compiled by ZCC together with various stakeholders and have been submitted to the Ministry of Commerce so that the minister can present the bill to parliament for amendments.

Labels: FINANCIAL MARKETING ASSOCIATION, MILES SAMPA

posted by MrK @ 6:02 AM