Gape KABOYAKGOSI &

Masedi MOTSWAPONG

27/08/2014

REGULATORY FRAMEWORKS AND ECONOMIC DIVERSIFICATION

Laws, Institutions and Likely Effects

INTRODUCTION Regulation IS a tool of government-growing in use!

From government ownership to ‘arms-length’ regulation (globalisation, marketisation, & privatisation)

NOT studying (social regulation: the control of the effects of capitalism on people)

Institutions do matter (NIE) conception. What limits on government power? LawOrganisation Culture

OBJECTIVES Review the implications of regulatory

arrangements on diversification

Develop a framework to predict the likely effects of regulatory instruments on economic regulation

Name of Regulator Sector Year Type of Regulatory Institution

BOCRA Telecommunications 1996 Independent Regulator

Civil Aviation Authority Air Transport 2004 Independent Regulator

Law Society of Botswana The Legal Fraternity 1996 Self regulator

Architects Reg Council* Architects 2009 Self regulatory

Botswana Inst of Accountants* Accountants 2010 Self-regulatory

Botswana Stock Exchange The Stock Exchange 1985 Independent Regulator

Botswana Examinations Council Examinations standards 2007 Independent regulator

Botswana Bureau of Standards Various 1995 Standards Authority

Botswana Training Authority Education 2002 Independent regulator

Financial Intelligence Agency Financial 2009 Semi autonomous government Dpt

Botswana Press Council Print media 2002 Self regulatory authority

Botswana Health Profs Council The health professions 2001 Self-regulatory

Engineers Registration Board Engineering Profession 1998 Self regulatory agency

Botswana Examinations Council Schools examinations 2002 Independent regulator

Dept of Environmental Affairs Environment 2005 Government department

National Broadcasting Board** The media 1999 Independent regulator

Botswana Training Authority Telecommunications 2002 Independent Regulator

Tertiary Education Council Tertiary education 2002 Independent regulator

NBFIRA NBFI 2008 Independent regulator

Bank of Botswana Monetary policy 1975 Independent regulator

JUSTIFICATION

i. The limits of the ‘good governance’ metaphor

i. Many regulatory agencies coming up to manage policy

i. A signal of commitment to external players

ii. Instrument to ‘capture’ certain activities

i. Regulation imposes costs [RIA] [FIAS/BIDPA

i. Interact with external business regimes

APPROACHReview of laws and organisations # non

mining industries

Laws are enforceable and policies are not

Note that the EDD Strategy falls firmly in the latter

THEORY & INSTITUTIONALISM Economic theoryPrincipal AgentPublic interest

Types of Regulatory Entity

Social v Economic Regulation

METHODOLOGY Use of past BIDPA studies

Desk Review Legal Review Review of Official Documents

POLICY APPLICATIONS Advocacy for regulatory reform Development of framework.

Contestability (highly competitive? High product/service differentiation?]

Ownership type (majority government? Private?]

Credibility (role of the minister? How predictable? Competitive neutrality?]

Entry/exit rules

RESULTS: AIR TRANSPORT Air Transport:Loss making airliner/protected from competition

BASA and protectionism Domestic entirely protected

RESULTS: BMCBMC

Poor performing monopoly

Domestically entry is allowed

Exports are disallowed-what’s a small economy to do?

RESULTS: TELECOMMUNICATIONSTelecommunications

Three players in Mobile

Highly competitive for price

Highly diversified for productsSMS + VoIP + Money Transmission etc

Model to copy?

RESULTS: ELECTRICITYLegal monopoly # ESA

Very poorly performing state owned utility

Electricity needed for economy to thriveMinister may approve competitor

RESULTS:COMPETITION REGULATION

Ought to enable entry and diversity

Ought to ensure discipline and fair-play

Has exemptions that ‘kill’ competitive neutrality

REGIONAL INTEGRATION Botswana member of SACU; WTO; UNCTAD etcSome laws restrict capacity to innovate/grow/diversify

CONCLUSIONS Laws too restrictive for ‘things’ that

allow diversification

Diversification efforts too ‘govt-centric’

Credibility needs consideration

SOLUTIONS SET? Separate political influence from

economic decision makingSet up mechanisms to restrict the

discretion of regulators Build more robust acocuntability Take government out of

business/increase competition