Traders accused of price abuses after devaluation

BY KARISSA GALL & THOM KHANJE

Some retailers on the local market have been accused of consumer abuse through exaggerated prices increases following the devaluation of the Malawi kwacha last month.

The Consumers Association of Malawi (Cama) has since warned Malawians to inform themselves on their consumer rights in the face of exploitation by traders after the devaluation.

Cama Executive Director John Kapito said on Thursday the association has noted “quite a number of abuses, especially in the retail chain,” and “that prices of detergents and bread have gone up; some with margins that have nothing to do with the devaluation.”

“Considering that the Malawi market is highly imperfect, where producers and suppliers of goods and services are never monitored on how they conduct their pricing of goods… pricing abuses are common amongst our traders,” he said.

“The Malawi market is mainly run by cartels and monopolists… and they are often colluding on what to charge.  We have already witnessed how big and small suppliers have colluded, and this is hurting consumers.”

Kapito said Cama has been monitoring pricing for the past six years, and that now more than ever there is a need for increased transparency in market pricing and consumer awareness.

“There is now need to have a platform where consumer prices could be released to the public so that they can make informed choices,” he said.  “We also believe that releasing prices from both the good and bad shops can assist to create competition on the market.”

While Kapito said Cama plans to begin releasing price information to the public, including “the landed cost of products that we have on the market for which [Cama] believe (s) consumers are being ripped off,” he urged government to take action to enforce the Consumer Protection Act and curb abusive business practices.

When questioned, Richard Chiputula, director of mergers and acquisitions at the Ministry of Industry and Trade’s Competitions and Fair Trade Commission, observed that while some traders have rushed to raise prices without evaluating the effect of devaluation on their cost of production, others are still selling at old prices as they undertake mathematical calculations of their new overhead costs.

“Others are being more realistic,” he said.

Chiputula reaffirmed that the Consumer Protection Act demands reasonable conduct in doing trade and that in trying to control the situation the commission will work to establish whether a business has been “reasonable” with prices adjustments.

To do so, he said the commission has been monitoring practices by traders since the devaluation of the kwacha and last week took part in a meeting organised by its mother ministry which was aimed at discussing movements in commodity prices as a result of the devaluation.

“Following the meeting, we have engaged some of the major players in the manufacturing and retail sector to discuss the right steps they should undertake after the devaluation,” he said.  “Raising of price is inevitable for most but business people should not take advantage of poor people by exaggerating the increases.  They have to be reasonable.”

Chiputula said that if a trader is found to have made unreasonable price adjustments the commission “may be forced to take action as stipulated in the law, including possible revocation of trading licenses.”

But Kapito maintained that the commission could be doing more to make Malawians aware of their consumer rights, saying that while Malawi has “one of the best laws on consumer protection in the region… what is missing is the state to make that information available to the public.”

Kapito urged government to not only “encourage the industry… to avoid cheating and abuse” but also “ensure that there is free information on the impacts of the devaluation on certain products.”

“What consumers need now is not sympathy but correct information,” he said.  “The consumer and competition laws do provide relief in terms of redress… but you need your people to know what is contained in such laws as their rights.  The state has to ensure that consumers can demand these rights when they are abused.”

***

To learn more about consumer protection laws and opportunities for effective consumer redress in Malawi, you can contact Cama by calling (265) 1-844-795 or by writing to P.O. Box 5992, Limbe.

***

This article was originally published in The Daily Times newspaper on June 4, 2012.

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About karissagall

Karissa Gall is a Canadian journalist.

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