Price gouging is worsening Nigeria’s wounded free market economy. ONYEKORMAKA ASABOR, in this piece, suggests ways to bring the monster to its knees
That suppliers of goods and services in Nigeria are wont to take advantage of the prevailing harsh economic situation in the country to pass extortionate prices of goods and services to consumers is a given. They have for long been impressing it on the consumers that the reason for monumental increase in prices of goods and services is the prevailing harsh economic situation in the country; which, in most cases, does not reflect market realities.
Emphatically put, businessmen hoard products and gouge prices to maximise profits. It may not be wrong to say that Nigeria’s economy has, for decades, been in an unfavourable state to the detriment of consumers.
Price gouging is a term referring to when a seller spikes the prices of goods or services above a considered reasonable level.
However, most economists and observers acknowledge that beyond the official announcement of the recession in 2016, the country had being enmeshed in economic quagmire much earlier.
All eyes on govt
Whereas the cause of the present economic state of the country has become a matter of economic and political debate, in most cases between the leadership of the major political parties, it appears that the political aspect of the debate has been more in the front burner than the economic, administrative and even the legal angles. Against this foregoing background, most of the respondents engaged in a staggered poll by Financial Street were unanimous in their views that the government needs to save consumers from arbitrary price increase by suppliers of goods and services through the re-introduction of Price Control Board as it was in the past.
Some of them insinuated that the government has ignored the administrative and legal aspect of the problem that unarguably culminated in the emergence of the present economic cul-de-sac. Others are categorical in their views that the government has unwittingly failed in its duty to steer the economic ship to safety; thus leaving consumers at the mercy of shylock businessmen.
It is no longer news that at every turn, prices of goods and services have skyrocketed, who, when pressed for explanation for the hike, would cite the exchange rate, among others. These excuses, which are better viewed as afterthoughts, are used even for basic food and household items that are locally sourced and produced. This calls for urgent government intervention by way of price regulation in the market place. Otherwise, manufacturers and suppliers of goods and services will exacerbate the existing economic problems.
‘Bring back PBC’
Financial Street respondents are unanimous in their views that conceptual basis exists for government intervention in adjustment of prices for goods and services. They argue that among the interests of the consumer deserving protection is his right to a fair bargain; in essence, they deserve to get value for their money. No doubt, paying the right price for the right goods or services is the hallmark of a good bargain.
Consumers of complex goods and services are exposed, daily, to problems of product safety, fair trade practices, product and services quality and dispute resolution. Evidences abound in contemporary times that fake and adulterated products, malfunctioning and poor quality products, defective and inherently dangerous products, foreign particles in drinks, as well as extortionate and inflationary prices.
Edwin Eluma submitted, “Many Nigerians, who were not born when the Price Control Act of 1977 was in force, will not understand what it was to sell or buy under the law.”
He explained that when the law was in force, no trader could sell his products captured by the law at a price of he or she chose.
“You also could not sell milk or sugar at a price not approved by the government. These restrictions were made possible by a draconian law called the Price Control Act of 1977. The act basically gave the government powers, through its Price Control Board, to fix price of some commodities.
Financial Street reports that despite findings by Trading Economics, an online platform that provides historical data, economic forecasts, news and trading recommendations, says: “Consumer Price Index in Nigeria increased to 289.70 Index Points in June from 286.60 in May 2019, and CPI in Nigeria averaged 98.92 index points from 1995 to 2019, reaching an all-time high of 289.70 in June of 2019 and a record low of 14.36 in January of 1995.” It is very obvious that retailers and suppliers have been shortchanging consumers by always hiding under ‘unfavourable economy’ to increase prices of goods and services.
Godwin Ugwoke wants the government to immediately re-introduce PCB to save consumers from the exploitative tendencies of retailers and suppliers, who are in the habit of insincerely increasing the prices of goods and services.
He added: “If you go to other countries where prices of goods and services are controlled, prices of items displayed in markets are tagged. They will never pull your leg. What they display for sale is never sold beyond the stipulated amount allowed by law. They are sincere and always not greedy. If prices come down, they will bring it down; if it is up, they will jack it slightly. But in our own case, the tendency to get rich quick has become the order of the day across markets.”
The arbitrariness by traders in markets across the country has reached the stage where the government should do something, said Mr Olatubosun Oluwaloni.
“Even if some people say the re-introduction of PCB would be draconic, what the traders are also doing is draconic and evil,” he added.
Case for traders
In a phone interview with a baker, Mr. Ikechukwu Nnadozie, told Financial Street, “Bakers are adjusting to the rising costs of raw materials. The food sector, where bakery unarguably belongs, and which includes Food and Beverage, restaurants and retail services, has for long been feeling the effect of inflation.
“We have started to see some establishments increase the selling prices of their products due to the increasing prices of raw materials like milk and sugar to compensate for shrinking profit margins.”
Some bakeries, he pointed out, are just absorbing the higher prices of raw materials because increasing their selling prices might decrease their sales volume further.
Morgan Osarenkhoe recalled that since the CPI measured inflation rate by 11.25 per cent (Year-On-Year) in March 2019, where it was noted that it was 0.06 per cent points lower than the rate recorded in February 2019 (11.31 per cent), beyond statistical data, there had not been a favourable market environment between sellers and consumers.
“It will be unfair to start accusing sellers of unnecessarily increasing prices of their products and services. I think it is beyond their power. Some of them are truly honest. It is not the way people are thinking. I hope you know the rate of inflation since March 2019. Despite the data, which are being churned out? The reality is quite different from what is coming out from research efforts,” he said.
Ben Komolafe, an economist, said, according to the National Bureau of Statistics, Nigeria’s CPI increased to 366.80 points in February 2021 from 361.20 points in January.
He explained that with the rise of the CPI, the sellers and buyers are not in a better position to experience favourable market environment.
“I, however, see this as a temporary setback until the supply stabilises. The inflation is caused by a number of factors, which is mainly supply-driven,” he noted.
He raised the solution to flood the market with basic commodities, especially rice, sugar and flour.
“These commodities affect everyone, and higher prices of basic commodities will definitely decrease the disposable income of consumers, thus affecting the sale of establishments,” Komolafe further explained.
In the final analysis, the need for the Nigerian government to wade in and control pricing cannot be over-emphasised. This will tame the insensitive tendencies of some businessmen and the economy will be better for it.