CUTS International, a research and public policy think tank, has urged the Trade and Industry Minister to pull the Legislative Instrument (LI) intended to regulate cement pricing in the country from parliament.
Instead, the Minister should advocate for the adoption of the Competition and Fair-Trade Practices Bill (2022), which could address sector-specific challenges and the entire market by prohibiting unfair and anti-competitive acts.
Mr. K.T. Hammond, the trade minister, on Tuesday, July 9, this year, laid before Parliament an LI to, among other things, regulate cement pricing in the country.
CUTS International, in a statement signed and issued by Mr. Appiah Kusi Adomako, its West African Regional Director, stated that while the organisation appreciated the minister’s efforts to reduce cement prices, the approach must be evidence-based and not lead to market distortion.
‘Whilst in the short term, consumers in the country may be able to see cement prices stabilising or plummeting because of the tsarist
effort by the government, we must equally be concerned about the medium and long-term implications of such an approach.
‘When the government intervenes in a deregulated market and comes with price controls, it has the potential to scare industry players as well as potential investors.’ the statement explained.
The statement warned that ‘in the long run, some of the cement players may decide to exit the market because they do not find it profitable, deterring potential new entrants.’
‘If care is not taken the fourteen cement companies in the country could be reduced to one or two or they may be emboldened to form a cartel or price-fixing gang. This can take us back to the antediluvian days of the GHACEM monopoly or the GHACEM-Diamond duopoly,’ it added.
Ghanaians, according to CUTS International, should be concerned about how the country’s regulations were drafted without ministries and agencies doing a thorough regulatory impact assessment to understand the potential for unintended consequences.
‘Like th
e financial sector clean-up which ended up with the decimation of indigenous banks, and savings and loans from the banking landscape…now majority of the high street banks in the country are owned by foreigners, who expatriate their profits and dividends leading to depreciation of the cedi,’ it said.
The statement also rejected the Minister’s claims that there could be cement cartels in the country, explaining that macroeconomic factors like inflation, interest and exchange rates, demand and supply were major causes of the price hikes.
‘It is not only cement that the prices have gone up. The prices of almost all goods in the country have gone up: iron rods, nails, paint, used and brand-new cars, roofing sheets, clothing, and even plot of land.
‘Everywhere in the world, standards authorities like the Ghana Standard Authority (GSA) have a duty to set and enforce technical standards as contained in Act 1078. Nowhere in the world is a standard agency involved in price setting and price control.
‘The Cement Pri
ce Committee comprises six scientists headed by the Director General of the GSA, Professor Alex Dodoo. Price regulations fall within the competencies of economists and mathematicians.
‘Take for instance, the Energy Commission is a technical regulator of the energy sector whilst economic regulation of electricity falls under the competencies of the Public Utility Regulatory Commission (PURC),’ the statement explained.
The Think Tank argued that a Competition and fair-trade law was the best way to address the problem, noting that the law would promote fair competition, protect consumers, ensure a level playing field for businesses, and foster innovation and economic efficiency, when passed.
Furthermore, such legislation would prohibit the formation of monopolies and the abuse of dominant market positions, guaranteeing that no single entity controlled a market at the expense of competitors and consumers.
Ghana has had a draft National Competition and Fair-Trade Practices Bill, and a Consumer Protection Bill
on file with the Ministry of Trade and Industry since 2006.
‘It is through a functional competition regime that will safeguard the free market against the tyranny of unfair trading practices and to bring efficiency to the market.’ the statement added.
Source: Ghana News Agency