The institutional and policy framework for regulation and competition in Ghana.

Abstract

There is a long history to regulation in Ghana, dating back to the colonial days when the regulation of mining land was perceived to be a tool used by the colonial government to protect large mining concessionaires from the intrusive activities of indigenous small scale and informal mining operations. Throughout the long period beginning from the 1960s to the early 1980s, when the state controlled most formal economic activities, the issue of regulation was taken for granted as the state developed only minimal structures for the purpose of regulating the interaction among different economic agents, without interfering too much with old regulations. Since economic reforms began in 1983, however, there has been a significant movement towards the establishment of formal regulations intended to ensure that the withdrawal of the state from the production of basic goods and services did not result in new private monopolies that exploited their market positions, particularly against the poor. The political liberalization that later accompanied economic reforms, was also used to entrench the development of regulatory institutions and policies, particularly with respect to the exploitation of natural resources. A new culture appears to have been developed where consumers increasingly see regulation as essential to the enhancement of livelihoods in a liberal economy. This is reflected by the increasing civil society consciousness and activism, despite the obvious weakness of organized consumer groups. But while the need for regulation is now widely accepted, the role that donors played, through the attachment of conditions to various aid packages in ensuring that regulatory bodies were created, cannot be overemphasized. Thus the creation of regulatory agencies was as much the outcome of donor pressures as it was a 'natural' consequence of the new liberal environment. The result of these influences, however, is that the approach to regulation of many economic activities, is fairly standard, i.e., the development of a level playing field for all actors, without taking into account the capacity of the different actors to play on that level field. Regulation is used to remove policy bottlenecks to effective competition but not the structural ones. Regulation is intended to bridge informational gaps between different economic agents, but the gaps are often wider than can be feasibly bridged by the agencies. Regulation is not yet widely used to strengthen weak institutions through economic incentives, as in the financial sector, for example. Regulation is carried out through a large number of new regulatory agencies, required by the constitution. The agencies are often fairly independent from the various arms of government, but sometimes have to rely on government ministries for logistical support. Their major problems are indeed largely logistical, as they struggle with inadequate human and financial resources. In sum, many observers see the regulatory environment as still developing, with fairly solid laws and clear enforcement mechanisms, but weakened by the still poor environment. The continued dominant role of a 'state monopoly' in the telecommunications sector is often used as an example of how 'halfhearted' regulation can impede competition. Just as the mass poverty of the people makes price regulation a difficult option, so does the weakened legal system after many years of poor governance.

Citation

Manchester, UK, CRC Working Paper, No. 46, 48 pp.

The institutional and policy framework for regulation and competition in Ghana.

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