A Commentary By Ranger
Many angry Sierra Leoneans have maintained that Sierra Leone having a free trade regime does not give traders a carte blank to fix prices as they want.
Very recently, with very little or no reason, the price of cement that hovered around an acceptable Le65, 000 per bag suddenly jumped to Le Le80, 000 in the capital city and very much higher in the provincial towns.
In spite of the Minister of Trade and Industry having assured the nation that after negotiations with the country’s two biggest cement producers, LEOCEM and DANGOTE, there has been no return as at this week to the former price.
It is very important for the New Direction Government, whose avowed mission is to reduce the burden of high cost of living that caused the people in 2018 to vote it into power, to know that the cost of cement is directly related to rent.
The higher the price of cement goes, the higher house owners increase their rents’ to the detriment of the poor suffering masses whose budgets for basic essential goods and services are already stretched to breaking point.
Again, what we think the Government, in particular, the Ministry of Trade and Industry must know is that a free market economy which is supposed to promote the production and sale of goods and services, with little to no control or involvement from any central Government agency, is not a license for producers and business people to charge extortion prices for their goods and services at the expense of the poor suffering masses that the Government has an obligation to protect from exploitation.
Monopolies like LEOCEM and DANGOTE because they have no competitors, which are clearly anti-free market, should not take it upon them-selves to raise prices indiscriminately. That is why the people are calling on the Government to open up the trading space for more people to import our basic goods and services.
Fact of the matter is that, even in the West where the ideology of free market originated from, there are controls in the marketplace in the form of Government regulations.
In principle, in a free market, producers are incentivized to produce what consumers want at a reasonable and affordable price – with the emphasis on reasonable and affordable prices.
But since self-interest is the primary motivator for all economic decisions, the Government’s role primarily in the market should be to prevent monopolies, allow fair and equal access to markets for all, protecting the nation and its markets from price fixing by monopolies and oligopolies.
Whilst it has several advantages for consumers, free market economy has several disadvantages.
1. Poor quality – Since profit maximization is the biggest motivation for firms, they may try to reduce their costs unethically and increase prices irrationally.
Examples of harmful effects of unethical cost reduction measures include polluting the environment or exploiting (overworking, under-paying, etc.) workers. Government’s intervention is necessary to limit these harms.
2. Goods and Services -that are not profitable will not be produced or run. In such cases, the government must provide these goods and services so that people do not go with their basic needs unmet.
3. Excessive power of firms – Large firms can still dominate certain markets, even where there is some competition.
This allows them to maximize their profits by exploiting suppliers (by squeezing their prices down) and consumers (by charging higher selling prices). For example, Amazon is guilty of such practices in the book industry, where they have dictated unfair terms to publishers.
As such, we the citizens firmly believe that our Minister of Trade and Industry should like, the no-nonsense Dr. Sandy at Lands, take a very robust attitude towards controlling the widespread corruption that exists in the market place with regards exploitative pricing by firms, companies, businesses and traders if the dream of reducing poverty is to be actualized.