The
past
two
weeks
have
seen
a
raging
public
debate
as
to
whether
the
proposed
Legislative
Instrument
(LI)
by
the
Ministry
of
Trade
and
Industry
(MOTI)
meant
to
regulate
the
prices
of
cement
is
the
best
in
the
face
of
increasing
prices
of
cement.
This
LI
has
generated
some
controversy
from
the
Cement
Manufacturers
Association
of
Ghana
(CMAG).
Other
industry
players
have
also
waded
in
their
opposition
to
regulation.
As
a
consumer
protection
advocate,
I
do
not
endorse
any
measure
that
can
lead
to
market
distortions
and
create
inefficiencies.
Short
Term
vs
Long
Term
and
the
Unintended
Consequences
In
the
short
term,
consumers
in
the
country
may
be
able
to
see
cement
prices
stabilizing
or
plummeting
because
of
the
tsarist
effort
by
the
government.
As
an
economist,
I
am
equally
concerned
about
the
medium
and
long-term
implications
of
a
regulatory
intervention.
When
the
government
intervenes
in
a
deregulated
market
and
comes
with
price
control,
it
has
the
potential
to
scare
industry
players
as
well
as
potential
investors.
In
the
long
run,
some
of
the
players
may
decide
to
exit
the
market
because
they
do
not
find
it
profitable
to
be
here.
This
can
also
send
signals
to
the
broader
investors
and
the
country’s
share
of
foreign
direct
investment
(FDI)
may
start
to
dip.
Potential
new
entrants
into
the
cement
industry
would
not
want
to
risk
their
investment
so
there
will
be
no
new
players.
If
care
is
not
taken,
the
14
cement
companies
in
the
country
could
be
reduced
to
one
or
two.
This
can
take
us
back
to
the
antediluvian
days
of
the
Ghacem
monopoly
or
the
Ghacem-Diamond
duopoly.
The
solution
that
the
government
is
proposing
should
not
be
worse
than
the
problem
it
intends
to
solve.
In
the
words
of
Martin
Luther
King
Jr
this
price
regulation will
be
like
“a
tranquilizing
Thalidomide,
relieving
the
emotional
stress
for
a
moment,
only
to
give
birth
to
an
ill-formed
infant
of
frustration.”
In
the
long
run,
consumers
may
not
be
able
to
buy
cement
because
of
the
potential
effect
of
this
regulation.
I
am
sometimes
worried
about
how
regulations
are
crafted
in
this
country
without
ministries
and
agencies
undertaking
a
robust
Regulatory
Impact
Assessment
(RIA)
to
understand
the
potential
of
any
unintended
consequences.
The
financial
sector
clean-up
ended
up
with
the
decimation
of
indigenous
banks,
and
savings
and
loans
from
the
banking
landscape.
What
has
been
the
effect
of
the
banking
sector
clean-up?
Now
majority
of
the
high
street
banks
in
the
country
are
owned
by
foreigners
and
when
they
wire
their
profits
and
dividends
in
dollars
back
to
Lagos
and
Johannesburg,
the
cedi
bleeds
heavily.
The
Problem
of
the
Cement
Industry
The
Trade
Minister,
K.T
Hammond
in
an
interview
said
that
the
total
installed
capacity
of
the
local
cement
producers
in
the
country
is
about
11
million
metric
tonnes
and
the
demand
is
not
up
to
the
supply
limit.
The
Minister
believes
that
there
could
be
cement
cartels
in
the
country.
But
far
from
the
issue
of
demand
and
supply,
the
Minister
failed
to
admit
macroeconomic
factors
like
inflation,
interest,
and
exchange
rates
that
conspire
against
cement
manufacturers.
It
is
not
only
cement
prices
that
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,
rice,
and
cooking
oil.
Why
are
we
subjecting
only
cement
to
price
regulation?
Without
any
complete
diagnostic
study
of
the
cement
sector,
any
over-the-counter
approach
will
be
counterproductive.
A
problem
half
identified
is
half
solved.
Failure
to
diagnose
the
problem
of
the
sector
will
result
in
a
solution
that
does
not
solve
and
an
explanation
that
does
not
explain.
GSA
and
Price
Regulation
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
Price
Committee
consists
of
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).
A
careful
reading
of
the
Ghana
Standards
Authority
Act
2022,
Act
1078
makes
me
doubt
whether
the
lawmakers
conferred
any
mandate
to
the
Minister
to
formulate
a
regulation
to
regulate
cement
prices.
The
GSA
(Pricing
of
Cement)
Regulations
derive
its
basis
from
paragraphs
(f
&
r)
of
Section
80
of
the
GSA
Act
1078.
Section
80
preamble
is:
the
Minister
shall,
within
six
months
after
the
coming
into
force
of
this
Act
and
on
the
advice
of
the
Board,
by
a
legislative
instrument,
make
regulation,
(f):
to
govern
the
treatment,
processing,
and
manufacture
of
goods,
the
packaging,
labelling,
advertising
and
selling
of
goods,
and
the
size,
dimensions
and
other
specifications
of
packages
of
good.
Paragraph
(r):
generally,
for
the
effective
implementation
of
this
Act.
Clearly,
the
rules
on
statutory
interpretation
do
not
confer
price
regulation
to
the
work
of
the
GSA.
This
could
be
a
matter
for
the
Supreme
Court
for
an
interpretation.
What
the
Cement
LI
Cannot
Achieve
Whilst
the
LI
may
succeed
in
the
short
run
to
tame
cement
prices,
the
LI
cannot
resolve
the
issue
of
cartels,
if
any
in
the
cement
industry.
Cartels
can
connive
to
control
the
supply
of
essential
goods
just
to
cause
the
prices
to
go
up.
The
LI
cannot
resolve
the
issue
of
price
fixing
and
territorial
allocations
in
the
industry
if
any.
Currently,
price
fixing
in
Ghana
is
not
an
offense
except
in
Section
44
of
the
National
Petroleum
Act
2005,
Act
691
which
criminalises
the
conduct
of
price
fixing,
cartels,
market
sharing
and
other
restrictive
trade
conducts
within
the
petroleum
downstream
sector.
There
are
lots
of
businesses
and
trade
associations
engaging
in
restrictive
trade
and
other
anti-competitive
conducts
that
tend
to
conspire
against
consumers
and
other
businesses.
All
of
these
conducts
cannot
be
prosecuted
because
Article
19
(11)
of
the
1992
Constitution
mandates
that
“no
person
shall
be
convicted
of
a
criminal
offense
unless
the
offense
is
defined
and
the
penalty
for
it
is
prescribed
in
a
written
law.”
What
will
the
Competition
and
Fair-Trade
Practices
Bill
do?
The
purpose
of
competition
law
is
to
promote
fair
competition,
protect
consumers,
ensure
a
level
playing
field
for
businesses,
and
foster
innovation
and
economic
efficiency.
Competition
law
seeks
to
prevent
the
formation
of
monopolies
and
the
abuse
of
dominant
market
positions,
ensuring
that
no
single
entity
can
control
a
market
to
the
detriment
of
competitors
and
consumers.
It
addresses
practices
such
as
price-fixing,
market
sharing,
and
collusion
among
businesses,
which
can
restrict
competition
and
lead
to
higher
prices
and
reduced
choices
for
consumers.
Competition
authorities
review
mergers
and
acquisitions
to
ensure
they
do
not
significantly
reduce
competition
or
create
monopolistic
entities
that
could
harm
the
competitive
landscape.
By
fostering
competitive
markets,
competition
law
helps
to
ensure
that
consumers
benefit
from
lower
prices,
better
quality
products
and
services,
and
greater
innovation
and
variety.
It
also
ensures
that
MSMEs
are
protected
against
unfair
business
practices.
Competition
results
in
increased
efficiency.
Since
2006,
Ghana
has
a
draft
National
Competition
and
Fair-Trade
Practices
Bill,
and
the
Consumer
Protection
Bill
with
the
Ministry
of
Trade
and
Industry.
I
am
sure
by
now
the
document
has
gathered
dust.
In
commercial
aviation,
it
takes
an
average
of
ten
years
for
a
manufacturer
to
design
and
manufacture
new
aircraft
and
get
regulatory
approval.
It
took
Boeing
about
eight
years
from
the
launch
to
the
first
delivery
of
its
Boeing
787
Dreamliner.
Similarly,
it
took
Airbus
about
ten
years
to
launch
the
first
delivery
of
its
A-350
aircraft.
Clearly,
the
18
years
that
it
has
taken
Ghana
to
get
the
bills
passed
into
law
is
not
acceptable.
With
all
the
conundrums
happening
in
the
cement
market
and
those
latently
simmering
in
other
sectors,
the
greatest
antidote
is
for
the
MOTI
to
take
these
two
bills
to
Parliament.
The
current
LI
before
Parliament
cannot
resolve
the
raging
barrages
of
anti-competitive
conduct
in
the
country.
By
the
Minister’s
action,
if
care
is
not
taken,
we
may
have
an
LI
to
regulate
every
item
in
which
the
price
is
going
up.
I
am
not
sure
that
the
best
use
of
Parliament’s
time
is
to
receive
an
LI
for
every
product
that
the
Minister
considers
a
price
regulation
is
necessary.
When
there
is
a
magic
bullet
that
solves
all
problems
is
available,
we
do
not
atrophy
our
energy
and
time
on
bits
and
pieces
of
subsidiary
legislations.
It
is
through
a
functional
competition
regime
that
can
safeguard
the
free
market
from
the
tyranny
of
unfair
trading
practices
and
bring
efficiency
to
the
market.
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