PRICE CONTROL IN NIGERIA: THE ROLE OF THE FEDERAL COMPETITION AND CONSUMER PROTECTION COMMISSION
PRICE CONTROL IN NIGERIA: THE ROLE OF THE FEDERAL COMPETITION AND CONSUMER PROTECTION COMMISSION
INTRODUCTION/CONCEPT OF PRICE CONTROL
Price control refers to government intervention in the marketplace to regulate the prices at which goods and services can be sold.[1] It is essentially establishing a minimum or maximum limit on the price of a good or service, preventing prices from falling below or rising above these set thresholds. Price control in Nigeria has been implemented at various times in an attempt to curb inflation, protect consumers, and ensure access to essential goods, particularly during times of economic hardship. By regulating the cost of basic commodities like food, fuel, and medicine, the government aims to prevent exploitation by sellers, reduce poverty, and promote social welfare. These measures are expected to help stabilize the economy by managing supply and demand, while also maintaining public well-being. Additionally, price controls mitigate the risk of social unrest by keeping essential goods affordable, thereby fostering social and political stability in the country.
HISTORY OF PRICE CONTROL IN NIGERIA
Price control in Nigeria has been shaped by the country’s economic and political environment, evolving through various phases of development since independence in 1960. In response to inflationary pressures following the civil war (1967–1970) and the oil boom of the early 1970s, the Nigerian government implemented formal price control policies to curb rising costs of essential goods.[2] This was done by the introduction of the Price Control Decree No. 25 of 1977 to regulate the prices of certain essential commodities. The decree gave the government powers to fix prices for items like foodstuffs, drugs, petroleum products, cement, and other basic goods. Violations of price regulations attracted penalties, including fines and imprisonment.[3]The Price Control Board was established by the Price Control Act in 2004 to enforce the decree and monitor price levels nationwide.[4]
In the 1990s, some forms of price control were also introduced by the government due to inflationary pressures that was worsened by the political instability at the time. Under successive military governments, fuel subsidies were maintained, and government intervention in pricing for items like cement, food, and drugs was increased.
Since the return to democracy in 1999, the Nigerian government has pursued a policy of economic liberalization, especially under the administration of President Olusegun Obasanjo between 1999–2007. Many sectors were opened up to private investment, and price control mechanisms were gradually reduced. Fuel price regulation, however remained a contentious issue. Successive governments have struggled to balance the need for deregulation with the political and social pressures to keep fuel prices low through subsidies. Attempts to remove fuel subsidies have often been met with nationwide strikes and protests.
In the 2010s, the government embarked on reforms aimed at gradually reducing subsidies and allowing fuel prices to be determined by market forces. By 2020, the administration of President Muhammadu Buhari announced the deregulation of the downstream oil sector, effectively ending price controls on fuel. Fuel price regulation has been a significant issue, with the government fixing the price of petroleum products to ensure affordability and prevent social unrest. This policy led to frequent protests whenever the government attempted to increase fuel prices.
In 2018, the Federal Competition and Consumer Protection Act (“FCCPA” or “the Act”) was introduced to promote market fairness and healthy competition in the market. Under the Act, a Commission was established to majorly implement the provisions of the Act and administer same for efficiency while entrenching stability of the market generally.
THE ROLE OF THE FEDERAL COMPETITION and CONSUMER PROTECTION COMMISSION IN PRICE CONTROL
The FCCPA establishes the Federal Competition and Consumer Protection Commission (“FCCPC”) as the authority to regulate business practices, prevent anti-competitive conduct such as price-fixing, monopolistic behavior, and market abuse[5]. It also provides tools to stop businesses from exploiting consumers. However, it is expedient to state that while the Commission can penalize for price manipulation, it cannot set prices of commodities.[6] Its regulatory power extends only to ensuring that businesses do not unfairly increase prices or collude to distort the market. In the month of August 2024, in a bid to exercise its powers under the Act, the FCCPC gave a one-month ultimatum to traders to bring their prices below a certain threshold or face sanctions. The purported aim of this action was to tackle what it termed unfair trade practices and exploitative pricing. Following the uproar made by this notice, the FCCPC issued another statement declaring that the aim of the directive is not ‘price control’ but protection of consumers against unfair trade practices.[7] While the functions of the FCCPC empower it to maintain a balance in the market, it does not empower the body to directly control or fix prices of goods and services.
According to Section 88(1) of the Act, it provides that the President may make a declaration that the prices of certain goods and services should be controlled. This provision however implies a temporary situation such intervention should be a clear date to elapse and not in perpetuity. It is important to state that this power is also not vested in the FCCPC or its Chairman but in the President of the Federal Republic of Nigeria. The consequence of this provisions is to the fact that, while the FCCPC plays a key role in regulating pricing fairness, it does not have the authority to directly control prices in Nigeria.
DISADVANTAGES OF USING PRICE CONTROL MECHANISMS
Price control in Nigeria, while aimed at making essential goods affordable, can lead to significant economic distortions. By interfering with natural supply and demand dynamics, price ceilings often create shortages, as producers find it unprofitable to sell at the mandated prices. This drives the emergence of black markets, where goods are sold at much higher rates. Additionally, price control discourages private sector investment, especially in industries like energy and agriculture, as businesses are less inclined to operate where their profitability is capped. This results in reduced innovation, less competition, and a decline in overall economic growth.[8]
Moreover, price control mechanisms, when paired with government subsidies (as seen in Nigeria’s petroleum industry), place immense financial pressure on the government. The subsidy burden consumes a significant portion of public funds, limiting investment in other critical sectors. At the same time, producers may reduce product quality or cut production altogether when their cost of production surpasses the controlled price, exacerbating shortages. While price control is intended to shield consumers from inflation, it can lead to hidden inflation through black market activity and higher prices for complementary goods. Thus, although well-intentioned, price control in Nigeria often has long-term adverse effects that outweigh the short-term benefits.
RECOMMENDATIONS
It is a step in the right direction that the FCCPC recognizes that price control is outside the scope of their jurisdiction. [9] Instead of an attempt to directly control prices, the Commission can put in place measures to increase competition so that consumers have a wide variety of options to choose from. The Commission should also exercise its powers to investigate and penalize businesses that collude to fix prices, ensuring competition drives fair pricing.[10] This also includes penalizing top market leaders that may want to take advantage of their position in the market and set oppressive price for goods and services within the scope of the Act.
CONCLUSION
In conclusion, while the FCCPC plays a crucial role in protecting consumers and promoting fair competition, it cannot not directly control or set prices in Nigeria. Instead, its mandate focuses on preventing anti-competitive practices and ensuring transparency in the marketplace. By investigating unfair pricing and sanctioning companies that exploit consumers, the FCCPC contributes to fairer market conditions. However, actual price control is typically handled by other government agencies, making the FCCPC’s role complementary in maintaining fair pricing and consumer protection.