With the signing into law of the Federal Competition and Consumer Protection Bill this month, “The consumer has become king”, says the National Assembly Business Environment Roundtable (NASSBER), which has been at the forefront of ensuring the legislation becomes law.
The bill, which has been described as very important to many stakeholders who encourage competition and consumer protection as a tool to boost the Nigerian economy and the business environment, is expected to spur increased job creations and reduce poverty. According to NASSBER, competition between businesses has been shown to increase efficiency, expand consumer choices and influence pricing.
Laoye Jaiyeola, CEO, Nigerian Economic Summit Group (NESG), while speaking on the signing of the Federal bill, stated that based on global research evidence, the new Competition Act may result in a 10 percent reduction in prices in uncompetitive sectors and a 1 percent economy-wide price reduction, both of which manifests as an income effect.
For poor households especially, this implies 318,021 additional employment over 5 years, with average yearly job creation of 63,604 and total income effect estimated at an average of N148.30 billion annually; and N741.52 billion projection in 5 years. A resultant effect may induce decrease in poverty, higher employment rates, and lower prices may precipitate an 11.8 percent reduction in relative poverty within 5years.
As noted by NASSBER, as Nigeria strives towards achieving a diversified private sector-led economy, it became essential to have effective legislation that encourages and regulates competition. The bill will create an opportunity for relatively small businesses to compete and thrive in the markets alongside the larger ones. According to the Economic Impact Assessment Report developed by NASSBER, competition law and policy is based on clear insights from economic history that public interest is best served by free competition in trade and industry. Competition amongst producers and suppliers improves quality, increases efficiency and results in lower “more competitive” prices.
Global research suggests that real prices drop by between 25-50 percent as a result of competition and deregulation in previously uncompetitive industries and quality of service also improves. Research also suggests an approximately 2.5% increase in employment as well as significant economic growth.
Furthermore, many are optimistic that the Federal Competition and Consumer Protection Bill will create a competitive consumer-centric market by providing competitive prices, product choices and most importantly economic efficiency through the prohibition of restrictive business practices that constitute an abuse of dominant market position in Nigeria. With such efficiency, Nigerians can be hopeful about better pricing of goods and services, higher employment generation, better productivity, increased consumer savings, increased investment and fast economic growth that the country deserves.
CALEB OJEWALE
