I am following this ‘egbon’ very closely. His energy levels are very high.
He just got a federal appointment after waiting for so long, and the need to hit the ground running has become more than compelling.
It’s not easy to see yourself, despite your credentials and strict loyalty, relegated from the A team to the C team.
After winning the presidency, the very critical next-level assignment of sharing the spoils of war came to the fore.
With this ‘egbon’ not making the cream of appointments, this one at the Consumer Protection Agency must now be used as a stepping stone to more visible portfolios, hence this push at price control.
Seeing the actions, including the latest reports where retailers have been given one month to effect price reductions, just makes me laugh.
In an aggressive need to show ‘doings,’ Egbon’s team has given the marching orders that all pricing should be reverted back or reduced ‘just like that.’
As much as we would all love to see this happen, one cannot help but ignore this as it smacks of not only naivety about the economics of the matter but also a clear ignorance of how macroeconomic forces work in leading to pricing, along with a total lack of understanding of the fiscal and monetary policies of the government he serves and their impact on pricing.
He gave an example of an item with a 500% markup on the shelf price as justification for his position.
No doubt, retailers have taken advantage of the ‘madness’ in the system to profiteer, and as such, the government must look very critically at engaging them to ensure order, but a blanket order like a military government’s will not work in this instance.
Basic economics, Mr. Bello, will tell you that in a period of hyperinflation, as we have today, replacement cost is a major factor in arriving at suitable pricing.
Another factor is interest rates. So, with interest rates crossing the 40% mark, coupled with the corrupt inefficiencies along the value chain of the import business that has been mentioned, you will begin to see that the 500% markup, if at all, cannot justifiably come down by more than 10% even if you carry ‘koboko’ and pursue them.
A reasonable 400% markup is what I would put if I were that retailer and wait for your koboko.
The cost of doing business for him has gone up by over 1,000%—check out the cost of power YOY, the cost of diesel YOY, the cost of fuel YOY, and the Naira devaluation YOY.
Then factor in increased corruption and the series of inefficient government parastatals that are part of the value chain, all giving the importer the longest end-to-end transmission process from purchase order to shelf.
Lastly, decreased purchasing power, especially for a non-essential product, leading to an overextended stay on the shelf, will show that the so-called 500% would have been totally eroded.
So, my brother, this is not the time for the usual window dressing or the ‘see-I-am-working’ kind of thing. This is the time for men to roll up their sleeves and do the work.
You should use your ‘power,’ if you have it, to convene a session with all stakeholders from both the fiscal and monetary sides to the Trade and Investment Ministry to other economic players and seek a robust end-to-end engagement to fight inflation, corruption, and red tape bureaucracy in a bid to streamline processes and ease the pressure on the economy.
This style of yours will lead to hoarding, which will lead to scarcity and ramp prices up even further.
Please don’t come and worsen our case. If you can’t better our lot, leave us the way we are.
Your focus should be on the managers of the economy and not those who will buy fuel at a particular price on Monday morning and by Tuesday evening see another price.
My brother, this is not the time for comedy. Let’s get serious.
Thanks.
Duke of Shomolu