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Why we urgently need a Commodities Price Regulatory Agency to stem Nigeria’s galloping inflation

By Aminu Imam

Never has there been a time more than ever before in our nation’s economic history when there is an urgent need for the introduction, or rather re-introduction, of a price control mechanism like the Price Control Board by past governments decades ago.

A simple general sampling of some major market prices across the various markets in the country of recent reveals that the price of commodities, from essential to non-essential, has been extremely irregular and unpredictable. The scenario is such that various categories of retailers, i.e. food sellers, eateries and canteens, are arbitrarily increasing the prices of their meals, attributing the high costs to unstable and unfavourable prices of farm produce which, according to them, they still buy for twice their original prices.

The situation experienced by consumers across the country with each passing day is fast becoming almost unbearable for most consumers, as prices of almost everything keep rising sharply and consistently, without any sign of abating.

When one visits any market and the seller offers a price for a particular item but where one perchance could not immediately afford the item at the said price and decides to forgo the item until the next day, upon returning to the same shop in less than 24 hours, one would discover that the price of the same item has shot up to almost twice the price it was earlier offered; this is even if the item was not newly stocked.

Indeed, most buyers seem to be permanently at the receiving end of these greedy sellers, given that whenever prices are increased,  innocent buyers or consumers tend to suffer for it the more, because the end customer is always the unfortunate target. This galloping inflation rate, which cuts across all the nooks and crannies of this country, is overwhelming almost everyone.

The much-touted official inflation rate of approximately 18 percent, according to the National Bureau of Statistics, (NBS), which kept on rising for over one year, is unfamiliar and alarming, to say the least. As for the unofficial rate, or better still, the ‘real’ inflation rate, undeniably, almost every household and everyone purchasing any item or commodity in Nigeria today would agree that it is simply unsustainable.

What is of utmost concern to the majority of the populace is of course food inflation; As a matter of fact, even non-food, critical items, are affected. For instance,  the steady rise in the price of a small cylinder of gas, from N4,500 to N8,500. This situation, which cuts across all other commodities, is almost overwhelming all and sundry across the land. 

Ostensibly, in the bid to absolve themselves from blame, some traders have justified the instability in prices of food items on the grounds that is caused by the devaluation of the naira. The increase in the rate of dollar-to-naira, according to them, has played a role in the hike in the prices of their goods. If you question the rationale behind the increase, you often hear some say: “Na so we buy o!” And when you say the price has reduced, they shout at you saying: “Na old market I get, I never go buy new one”. Similarly, others say the high fare charged by transporters is also a contributing factor. 

The problem, according to observers, is with our market traders, who often refuse to reduce the prices of their items even when they buy them at cheap rates. Some observers point out that these problems at the local level are created by us, the citizens.

However, some consumers insist that the sellers are not always sincere, as they are so desperate to make excessive profits at the expense of the buyers. Most of them are advocating for the re-introduction of a price control mechanism in the country.

In a market situation whereby sellers and service providers continue to engage in unfair practices by arbitrarily increasing the prices of goods and services, the authorities should at this juncture be compelled to seriously consider the option of initiating and implementing a price control mechanism that is capable of regulating the prices charged for goods and services in our markets.

What makes inflation undesirable is that it affects the marginalised poor amongst the population the more, who are not in a position to pass its effect on but bear its full ugly impact, as it undermines their purchasing power, but more importantly, increases the poverty and misery index in the land, undermines the nations capacity-utilisation at a macro-level and therefore erodes the Cross Domestic Growth, (GDP) growth rates in real terms. Therefore, the respite which the generality of the population are seeking is a dream yet deferred.

Not many Nigerians, particularly those born in the 90s and beyond are aware that there was a time, in the late seventies, when a seller could not sell his or her products at an arbitrary price. The restrictions were made possible by a law called the Price Control Act of 1977. The Act was popular then and was widely implemented in the days of General Muhammadu Buhari (when he was the military ruler). The Act basically gave the government powers,  through its Price Control Board, to fix the price of a wide array of commodities among which were bicycles and spare parts, flour, matches, milk, motorcycles and spare parts. Others are motor vehicles and spare parts, petroleum products, salts and sugar.

However, the Act was condemned by many Nigerians at the time it was in enforcement, particularly by sellers and businessmen, who considered it to be draconian and lopsided in favour of the buyers only.

Without doubt, the intent behind the implementation of such a control mechanism can stem from the desire to maintain the affordability of goods and to mitigate the impact of inflation on consumers of various products and services, or, alternatively, to ensure a minimum income for providers of certain goods or a minimum wage.

Historically, price control has been implemented by governments as part of a larger incomes policy package also employing wage controls and other regulatory elements.

According to Section 6 Sub-section 1 of the Act, It shall be unlawful for any person to sell, agree to sell or offer to sell, any or employ any other person, whether or not that other person is of full age, to sell any controlled commodity at a price which exceeds the controlled price. There are two primary forms of price control. They are the price ceiling and the price floor. The price ceiling form of price control means the maximum price that can be charged, while the price floor means the minimum price that can be charged.

Despite the condemnations that trailed the Act, today, many consumers have opined that it would be better for the government to re-introduce a price control mechanism similar to the Price Control Boards that existed in the seventies, a price control mechanism to regulate the prices of goods and services, particularly food prices, considering the fact that food is one of the three basic amenities a human being should not be deprived of.

Although the government is trying in this regard, by way of establishing consumer protection bodies to ensure that consumers’ interests receive due consideration at the appropriate forum, encourage trade, industry and professional associations to develop and enforce in their various fields quality standards designed to safeguard the interest of consumers.

Regulatory bodies such as the Standard Organisation Nigeria, (SON), Consumer Protection Council of Nigeria, (CPC), Nigerian Communications Commission, (NCC) and  Nigerian Electricity Regulatory Commission, (NERC), were created to safeguard the consumers in the market, but not with particular reference to price regulation.

Therefore, with the rate of this uncontrolled arbitrary price increase by some sellers and service providers, it has become necessary for the government to intervene in the consumer market.

Indeed, pundits are advocating that a price regulatory authority such as the Petroleum Price Regulatory Authority, (PPPRA), which performs the function of regulating the pump price in the petroleum sector, should also be considered by the government for the commodities sector. 

An agency, which could be called Commodities Price Regulatory Agency that would monitor and control the price of goods and services in our markets and set commodities’ price benchmarks for retailers and traders, can perform such a vital role of checkmating the unwholesome price hike of goods and services by some unscrupulous traders.

Without such a crucial regulatory body, the only end result of this endless inflationary spiral would be poverty and misery for the majority of the populace, God forbid.

Aminu Imam contributed this piece  from Tudun-Wada, Kaduna, and can be reached on 08033644990, 

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