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The Determinants and Effects of Intra-Regional Coordination Between Firms in Southern and East Africa: A Comparative Analysis of the Cement and Fertiliser Industries

The standard competition economics literature on cartels has focused on their harmful effects in terms of prices and output, without extensive consideration of their intra-regional dimensions, the influence of political economy factors, and the implications of cartels that are put in place for industrial development purposes. This thesis analyses case studies in the cement and fertiliser industries of countries in Southern and East Africa to assess the determinants and effects of intra-regional coordination. The analysis of coordination in these critical industries for growth is located in the political economy contexts of the selected countries. It contributes to the theoretical debates on cartels an understanding of how different interests and large firms, working through the state and with local elites, have shaped the dimensions of coordination and market power domestically and regionally.

Drawing on qualitative and quantitative information from firm-level interviews, competition law cases and secondary sources, the thesis analyses the static and dynamic effects of coordination in terms of prices and margins, and shows that the main regional firms have profited significantly. A key finding is that coordination has undermined regional competition, trade and investment, and raised barriers to entry, even in the context of the adoption of liberalisation and privatisation policies. The thesis demonstrates the dynamic factors which shape coordination including how the main businesses have lobbied and adapted their strategies over time to changes in the policies and political settlements of the different countries.

The cement industry case study is considered in two inter-related parts, taking the South African regional cartel and the Zambian market as the main cases, and, importantly, linking dynamics in these markets to the coordination at a regional level. Coordination in the regional fertiliser industry is assessed through a focus on Malawi and Tanzania, where coordination has involved local interests and global dimensions, including around state-led subsidies and agricultural development programmes. The comparative analysis of the determinants of coordination, which compares and contrasts the key findings from the case studies in reflecting on the literature, points to the need to rethink the standard analysis of coordination to account necessarily for its intra-regional and political economy dimensions.

Full Name
Dr Thando Vilakazi