The Centre for the Promotion of Private Enterprise has said that the proposal by the Federal Competition and Consumer Protection Commission to traverse markets across the country with objective of ensuring price regulation is unlikely to yield concrete outcomes.
The CPPE Director/CEO, Dr. Muda Yusuf who stated this in a press statement made available to NewsNGR said the initiative is not a sustainable strategy.
Yusuf noted that the FCCPC appears to be unwittingly transforming into a price control agency rather than a consumer protection commission.
He said that the disproportionate focus of the commission on the retail segment of the economy and pricing issues underscores the assertion.
“The core mandate of the commission is the creation of a robust competition framework across sectors and protection of consumer rights and interests
“Consumer protection is not about directly seeking to control price at the retail end of the supply chain.
“This is why the CPPE is concerned about the approach, methodology, targeting and the recent threats by the FCCPC to market leaders, traders and supermarket owners.
“The commission seem to be fighting the symptoms rather than dealing with the causes of the current inflationary pressure in the economy.
“What we need to fix are the fundamentals driving production, operating and distribution costs which resulted in spiraling inflation in the first place,” he said.
Yusuf noted that the dynamics of pricing and prices in an economy are much more complex and fundamental and do not seem aligned with the comprehension of the FCCPC on the issue.
He said the variables are numerous, multidimensional and dynamic adding that it is difficult to make pronouncements on issues profiteering in such circumstances without a rigorous analysis based on data.
“The example of the comparative price of a particular brand of fruit blender in the USA and Nigeria cited by the commission is too simplistic and superficial to be relied upon as a basis for the commission’s generalization about consumer exploitation by supermarkets in the country.
“The commission needs to be more diligent and thorough in its analysis before alleging consumer exploitation by the trading community. Sample size needs to be significant and data integrity needs to be assured to make the commission’s verdicts credible,” he said.
Yusuf appealed to the FCCPC to refrain from further intimidation of the operators in the retail sector of the economy most of whom are micro and small businesses, with many in the informal sector.
The sector, he added, creates millions of jobs across different levels and geographical jurisdictions.
He noted that there is an emerging risk of market suppression and private enterprise repression by the FCCPC, if the current trajectory continues.
According to him, this marks an elevation of regulatory risk in the Nigerian economy which is detrimental to investors’ confidence.
He noted that high prices negatively impact their sales and profit margins, adding that many of them had shut down their businesses because of the current economic shocks.
He suggested that the commission should work in collaboration with the other agencies of government to tackle the fundamental causes of inflation in the economy.
“The focus should be on causative factors driving prices, not the symptoms. This is a more sustainable approach than resorting to intimidation of traders, supermarket owners and market men and women.
“It is also important to draw attention of the commission to areas where there are frequent consumers rights violations like the aviation, health, energy markets, electricity market, financial services, telecoms and cable Tv sectors. These areas that demand the attention of the commission even more than the markets,” he said.
He said the commission needs a proper comprehension of the dynamics of pricing and the key drivers of inflation.
“These factors include the naira exchange rate depreciation, high energy cost, high cost of logistics, seasonality of food production, high cost of funds, extortions on the highways, high post-harvest losses, high cargo clearing cost, impact of the insecurity on food production, climate change and global factors disrupting supply chains,” he said.
Yusuf noted that there is also the emerging dimension of the increasing export of Nigerian products to neighbouring countries in the West African sub region and beyond as a consequence of the weak domestic currency.
According to him, the incentive to export Nigerian products to neighbouring countries has never been as intense as it is currently.
“This is because of the significant appreciation of the CFA relative to the naira.
“It has become more profitable to export many Nigerian products [including petrol] to neighbouring countries than to sell domestically because of the relative strength of the CFA. This situation has been exerting enormous pressure on domestic prices,” he said.