Is Price Control The Solution Or A New Problem For Nigeria’s Economic Crisis?

A New Economic Crisis or Relief?

Nigerians are facing an ever-worsening cost-of-living crisis. From skyrocketing fuel prices to soaring food costs, the struggle to make ends meet has intensified in recent months. On August 29, Tunji Bello, the head of the Federal Competition & Consumer Protection Commission (FCCPC), announced an ultimatum to traders, demanding they reduce their “exploitative pricing” within a month or face strict enforcement measures, including potential jail terms.

Bello’s declaration was clear: “If traders and producers do not comply, violators found guilty by the court will face severe consequences.” The FCCPC, set up to protect consumers’ interests, seems poised to take a firm stand on price control.

But is price control the right solution? As many Nigerians wonder whether this move will bring much-needed relief, experts and industry stakeholders have expressed grave concerns.

Price Control: The FCCPC’s New Strategy

Bello’s announcement comes at a time when Nigerians are already reeling from recent government policies that have worsened their financial hardships. The removal of fuel subsidies and the flotation of the naira have triggered widespread inflation, leaving many families unable to afford necessities.

“The FCCPC’s mandate is to ensure fair competition and protect consumers from exploitation,” Bello stated. “We cannot allow these exploitative practices to continue unchecked.”

On the surface, price control might seem like a reasonable response to the crisis. After all, if prices are too high for consumers, why not force businesses to lower them?

However, economic experts and business leaders warn that this approach could backfire, leading to even more severe problems for Nigeria’s economy.

The Dangers of Price Control in a Free Market

Critics argue that the FCCPC’s price control measures are not only legally questionable but economically dangerous. Price fixing, they say, attacks the very foundations of a free market system, discouraging investment and innovation.

“Price manipulation does occur, but the market should be allowed to regulate itself within the boundaries of fair competition,” the Nigerian Employers’ Consultative Assembly (NECA) explained in response to the FCCPC’s directive.

NECA’s position reflects the concerns of many business leaders who fear that price control will stifle economic growth by driving away investors. They also warn of a potential rise in black-market activities and product hoarding as legitimate businesses face tighter restrictions.

READ ALSO: FCCPC’s Mandate Is Consumer Protection, Not Price Control – CPPE

In reality, the government itself may be contributing to the problem. High costs of transportation, increasing rent, and multiple taxes are some of the challenges faced by traders and producers, as they explained to Bello during the August meeting in Abuja.

Without addressing these underlying issues, simply forcing traders to lower their prices may create even bigger problems for the economy.

Historical Failures of Price Control in Nigeria

History shows that price control has rarely been successful in Nigeria. In the 1980s, during Muhammadu Buhari’s tenure as Head of State, price control led to chaotic markets, with long queues for basic commodities and soldiers enforcing prices with horsewhips. That attempt ultimately failed, and many fear that Bello’s strategy could lead to a similar outcome.

“If Bello’s plan is to send enforcers into markets and shops to check prices, it will create an uncontrollable mess,” said an anonymous trader. “It will open the door to corruption and harassment of businesses.”

The Tinubu administration, which has already been criticised for its handling of economic policies, could face further backlash if this new initiative leads to increased market instability.

The Real Culprit: Government Policies Driving Up Prices

Rather than blaming traders and producers for high prices, many argue that the government should take responsibility for the economic situation. Since President Tinubu took office, several policy decisions have drastically increased the cost of living for Nigerians.

It began with the removal of the fuel subsidy, which caused fuel prices to spike overnight. The government then floated the naira, causing the currency to lose 68% of its value. This led to further inflation, as the cost of importing goods skyrocketed.

Most recently, the government increased electricity tariffs for Band A consumers from N68 per kilowatt hour to N225 per kWh. Last week, NNPC Ltd. raised petrol prices yet again, with prices reaching N855 per litre in Lagos.

With such rapid increases in the cost of essential services, it is no wonder that traders and producers have had to raise their prices to survive.

“Bello’s approach won’t work because the government itself is causing the price hikes,” said a local economist. “Without addressing the root causes, no amount of price control will make goods cheaper for Nigerians.”

What Is the Way Forward?

So, what can be done to alleviate the economic crisis? Rather than focusing on price control, many experts argue that the government needs to tackle the structural issues driving up costs.

One key solution is to reduce the cost of fuel, diesel, and kerosene, which are crucial for transportation and production. Lowering these costs would allow businesses to operate more efficiently and reduce the price of goods.

Additionally, the government should take steps to address the multiple taxes and importation challenges that traders and producers face. Ensuring a more stable and supportive environment for businesses will encourage investment and innovation, ultimately benefiting consumers.

Bello also has an important role to play, but rather than cracking down on prices, his focus should be on combating hoarding, black-market activities, and the sale of substandard products. By targeting these specific problems, the FCCPC can help to protect consumers without harming the free market.

Will Price Control Help or Hurt?

As Nigerians continue to struggle with rising costs, Bello’s plan for price control may seem like a quick fix. However, the potential for unintended consequences is high. By discouraging investment and encouraging black-market activities, price control could ultimately make life harder for the very consumers it aims to protect.

In the end, only a comprehensive review of government policies and economic structures can bring about the kind of lasting relief that Nigerians need.

As Bello prepares to enforce his ultimatum, Nigerians can only hope that this latest move will not become another failed attempt to address the country’s deep-rooted economic challenges.