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Cameroon: Price Control, a Herculean Task
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The Post (Buea)
COLUMN
18 April 2008
Posted to the web 18 April 2008
Moses Njutain Ngemenya
One of two measures taken by Government recently to increase the purchasing power of Cameroonians is the reduction of taxes and consequently the prices of certain basic commodities.
This came within the backdrop of a wave of popular protests against rising cost of living, particularly food prices, in several developing countries across the world namely Burkina Faso, Ivory Coast, Democratic Republic of Congo, Haiti, Mauritania, Morocco, Mozambique, Senegal, and Cameroon.
Economic analysts attribute this to the all time high price of fuel, which has increased the cost of transporting goods. This is essentially an economic problem which needs concrete and effective measures on the short, medium and long term. The price surge has impacted severely mostly in developing countries partly because of bad management of their economies.
Several measures, including price control, can be employed to buffer this effect. However, price control, at best, will be a short term instrument despite the reduction of taxes on imported commodities because it is difficult to implement for a number of reasons. Firstly, its enforcement is costly and is socially confrontational.
The very few price control agents (PCAs) will have a herculean task covering the national territory, which is largely enclave and inaccessible. Alternatively, impromptu controls are not likely to have a lasting impact. Traders will soon master their movements and identities and outsmart them, especially in the advent of mobile phones.
This trick is already being employed in large markets in Douala and Yaounde. Retail prices are determined by several factors including production cost, supply, demand, rents, electricity, transportation and taxes, which push traders to stubbornly maintain high prices in order to stay in business; hence they will not easily give in to harassment from PCAs.
Also, further rise in the cost of fuel may nullify the price fixing strategy, which will become meaningless once the prices have to rise to allow for a profit margin; the anticipated improvement in the purchasing power of consumers would have been compromised once more to the initial low level. Another drawback is the all too pervasive corruption syndrome which will seriously compromise the impact of the PCAs.
The rising inflation is due to a failure to build strong economies in the affected countries with a solid agricultural sector for food self-sufficiency, and an efficient manufacturing base for transformation of primary produce and raw materials for added value. Hence, these countries with low Gross National Incomes, per capita and low purchasing power cannot readily afford the high cost of imported food.
There is also the need for full liberalisation, de-monopolisation of their economies in addition to tax incentives to ensure competitive pricing. Cameroonians trust the Government's price control without giving a thought to its practicability.
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Analysts say significantly subsidising fuel prices as obtains in some African countries, instead of price reduction, would be more effective in stabilising retail prices. In the mean time let's wait and see how things will evolve.
when we talk of a price increase, we are refering to an increase in the prices of commodities in the market as a result of an increase in fuel prices. yes the increase in fuel prices is a good cause for an increse in prices but it is not the only thing especially in the cameroonian case. the increase in taxes to business men should also be considered as a cause becuase it dicourages investment alot. for how can people go into business if at the end of the day they canot make some profit. for there is no buasiness... [Read Full Text]
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