CHAPTER ONE

GENERAL INTRODUCTION

1.0 INTRODUCTION

This chapter provides an introductory overview of the study. It embodies the background to the study, the statement of the problem, the research objectives, and research questions. It also highlights the research methodology, examines relevant literature review and theories that relate to the subject matter, justifies and provides significance of the study, defines key terms as used in the study and mentions the synopsis of the other chapters of the study. This chapter therefore, sets the pace for the research, and situates the context and perspective of this work.

1.1 BACKGROUND OF THE STUDY

From a global perspective, the regulation of prices for goods is an essential component of economic governance, aiming to ensure fair and efficient markets[1]. Governments worldwide commonly implement policies and regulations to protect consumers, prevent price manipulation, and promote economic stability[2]. These regulations typically involve establishing frameworks for price control, monitoring market trends, and enforcing penalties for violations[3].

Price regulation is a widely practiced approach that varies across countries depending on their specific economic contexts and policy objectives[4]. Some countries opt for comprehensive price controls, where the government sets prices for a wide range of goods and services. Other countries may adopt selective price regulations, focusing on essential goods or sectors that are deemed critical for public welfare². The degree of intervention can also vary, ranging from strict controls to more flexible frameworks that allow market forces to play a greater role[5].

The goals of price regulation are multifaceted. They include safeguarding consumer rights, ensuring affordability, fostering competition, and maintaining market stability[6]. By establishing price controls, governments aim to prevent price gouging, collusive behavior among market players, and other unfair practices that could harm consumers. Price regulations also seek to address supply and demand imbalances, particularly for essential goods, by maintaining stable prices and preventing excessive fluctuations that could adversely affect vulnerable populations[7].

However, it is essential to strike a balance between consumer protection and promoting a favorable business environment. Excessive or poorly implemented price controls can lead to unintended consequences such as reduced product availability, disincentives for investment, and hindered competition. Therefore, careful consideration is necessary when designing and implementing price regulation policies to mitigate potential drawbacks and unintended outcomes.

The effectiveness of price regulation depends on factors such as institutional capacity, market structure, enforcement mechanisms, and broader economic conditions[8]. Additionally, globalization and interconnectedness among economies pose challenges for price regulation, as fluctuations in global commodity prices can impact local markets and create volatility⁵. Therefore, policymakers need to adapt and fine-tune price regulation measures to ensure their relevance and effectiveness in dynamic global economic environments[9].

In the African context, price regulation policies and practices vary across countries due to the diverse economic landscapes and policy priorities within the continent. Many African countries have implemented price regulations to protect consumers, ensure affordability, and promote economic stability[10]. These regulations are often focused on essential goods, such as food, energy, and pharmaceuticals, which have a direct impact on the welfare of the population[11].

African countries face unique challenges in implementing and enforcing price regulations. Factors such as inadequate institutional capacity, weak enforcement mechanisms, and the presence of informal markets can undermine the effectiveness of price controls[12]. Informal markets, which operate outside formal regulatory frameworks, can be particularly challenging to regulate and monitor, making it difficult to ensure price stability and consumer protection[13]. Additionally, high levels of poverty and income inequality in many African countries pose challenges in maintaining affordability while balancing the interests of producers and businesses[14].

Turning to Cameroon, price regulation is a significant aspect of the country’s economic policies. As a Central African nation with a diverse economy, Cameroon has implemented various measures to oversee and control prices across different sectors. The government has established price-setting mechanisms, price monitoring agencies, and collaborated with relevant stakeholders to ensure fair market practices and protect consumer interests[15]. Price regulations in Cameroon cover a range of goods, including essential commodities, agriculture, energy, and pharmaceuticals[16].

In Cameroon, price regulation policies aim to prevent price gouging, collusion, and other unfair practices that could harm consumers⁴. The government also strives to maintain stable prices for essential goods to ensure their accessibility and affordability for the population. However, like other African countries, Cameroon faces challenges in effectively implementing and enforcing price regulations. Factors such as inflation, fluctuating global commodity prices, and the presence of informal markets can impact the success of price control measures[17].

To address these challenges, policymakers in Cameroon need to continually monitor and evaluate the effectiveness of price regulation policies and make necessary adjustments to adapt to changing market dynamics[18]. This includes strengthening institutional capacity, improving enforcement mechanisms, and exploring innovative approaches to regulate informal markets effectively. Moreover, regional cooperation among African countries can play a crucial role in harmonizing price regulation policies and sharing best practices to enhance the effectiveness of price controls within the continent.

Studying price regulation in Africa, with a specific focus on Cameroon, provides valuable insights into the opportunities and challenges faced by countries in regulating prices for goods. By examining the experiences of African nations, policymakers and researchers can identify successful strategies, learn from past mistakes, and develop context-specific approaches to price regulation that contribute to economic stability, consumer protection, and sustainable development within the African continent.

Studying the regulations of goods prices in Cameroon within this global perspective provides valuable insights into different approaches, best practices, and challenges faced by various countries. By analyzing the experiences of other nations, policymakers and researchers can gain a broader understanding of the implications and potential strategies for improving price regulation in Cameroon, considering both the global context and the unique characteristics of the Cameroonian economy[19]. This knowledge can inform evidence-based policy decisions and contribute to the development of effective and balanced price regulation frameworks that benefit consumers and businesses alike.

However, there is no free market in the real world as government always intervene by putting some type of constraints in the allocation of resources and the exchange of goods and services; for example, the setting of minimum wages by many governments around the world. The Cameroon Government Practices the free market economy where it regulates itself by allowing the firms to set their prices. It allows businesses to seek growth opportunities, providing them with an incentive to realize a higher profit. As a result, competition gets more intense as firms are competing in a perfect competition setting. In such a system, the price of finished goods and services are declining but there are a greater variety of high-quality products. In fact, a free market uses all of its resources to generate a profit offering to the consumer efficient production of goods and services that’s meet their needs, offered at the lower possible prices and at highest qualities. Unfortunately, this situation rarely occur due to the unscrupulous behavior of goods and services providers as their sole aim is raise prices to make higher profit instead of exercising good conduct of business and promoting fair competition towards the protection of consumers.

Taking inspiration from international instruments, the Government of Cameroon has dedicated much effort in the Protection of consumers from being exploited by the seller.  Before the coming into force of the Law on consumer protection[20] in 2011, consumer protection Was within the jurisdiction of Law No. 90/031 of August 10, 1990. The 2011 law  establishes the legal framework for consumer protection in country. This was the first piece of legislation entirely consecrated to consumer protection in Cameroon.  This 2011 law and other laws promote and Protect consumers‟ interests. Cameroon, being a member state and signatory to the United Nations Convention on Trade and Development (UNCTAD), has adhered to a number of principles, policies and guidelines for the promotion and protection of consumers. This could be seen in the steps which she has taken to enhance consumer confidence in electronic commerce and privacy. From the judgment of an ordinary man, the Law on Consumer Protection would be a mirror image of the UN Guidelines on the Protection of Consumers but this is not the case because the Law in itself is too sparse[21], lacks enforcement mechanisms, fails to regulate the price and quality of basic Commodities.

Furthermore, wave of unrest hit a number of West and Central African countries in 2008, causing political instability especially in Cameroon, where the spike in food prices led to the riots, during which many people were killed by the security forces. Following the violence in Cameroon, the President lowered customs duties on food items including fish, wheat, salt and sugar.

In 2011, Minister Mbarga Atangana of the Republic of Cameroon articulated in a landmark speech On Crtv Radio the need for Protecting Consumer Interest. In his message he held that: “Cameroon has created a body to buy and regulate the price of basic food imports, The government-run Agency for the Regulation of Supplies of Basic Consumption Goods will import and stock major food items that will be sold only at approved prices” said the Minister, and he equally added that “The decision does not forbid other enterprises from importing food products into the country, But it is just to ensure prices do not go beyond the reach of the average Cameroonian.” According to the Minister, Consumers by definition, include us all. They are the largest economic group in the economy, affecting and affected by almost all every public and private economic decision. Two-thirds of all spending in the economy is by consumers. But they are the only important group in the economy who is not effectively organized whose views are often not head.[22] In view of this, the Trade Ministry of Trade has regularly issued  price list of basic commodities following the unauthorized increase in market prices which may lead to large inflation creating an unfavorable environment for long-term investment in the economy, as investors focus on short-term transactions. Thus, high and unstable inflation affects economic growth.

In addition, Consumer protection can also be traced from the United States which began from the 19^th century common law, which emphasized freedom of contract and caveat emptor (let the buyer beware). Over time, specific crisis and political events necessitated the creation of governments systems with jurisdiction over specific products and practices affecting consumers, and a broad array of private rights of actions were consumers can sue for damages, injunctions, attorney fees, and litigation cost if they can show harm for illegal practice.

1.2 STATEMENT OF THE PROBLEM

Due to the free-market economy operating in Cameroon, there is a need for government intervention in order to protect the consumer who finds himself in a very vulnerable situation. Government has intervened amongst other domains in the area of price homologation of basic commodities, alternatively referred to as products of mass consumption and in the area of promoting and ensuring fair market competition. The question here is whether this government intervention actually protects the consumer? Or Cameroon being a member state and signatory to the United Nations Convention on Trade and Development (UNCTAD)[23] has benefited the consumer in anyway. Despite all these attempts that have been made in the world and in Cameroon in particular to protect consumers, it has not yielded its desired goals.

Cameroon has expressed commitment in protecting consumers by enacting several laws for the protection of consumers.[24] Also, the 2006 law governing advertisement in Cameroon[25] which provides measures to regulate advertisement messages which may cause consumers to make uninformed choices. The problem however is that these laws do not reflect the realities on ground as traders continue to carryout unscrupulous acts which affect the consumers.

Another issue is the lack of adherence to the laws protecting consumers by producer who deliberately refuse to take these laws into consideration when engaging trading activities

Even the consumers themselves are unwilling to seek for reparations when they do suffer harm or exploitations, as they most often waiver their rights which makes it seem as if they consented to being exploited, hence its important to find out to what extent consumers appreciate the regulation measures of the government on prices; does the consumer cooperate with government in its effort to protect him?

The lack of knowledge on government’s efforts through the ministry of trade and other affiliated organs like ANOR (Agency for Norms and Quality in Cameroon)[26],an administrative public institution with legal personality and financial autonomy, under the technical supervision of the Ministry of Industry and under the financial supervision of the Ministry of Finance., SNH (Hydrocarbon price stabilization Fund), National Cocoa and Coffee Board, and MIRAP (Consumer Product Supply Regulatory Authority) and others to ameliorate the living standard of citizens puts the latter at the mercy of unscrupulous economic operators and even state Agents who most often infringe on their rights.  This study therefore shall throw more lights and increase awareness of consumers on their rights via-à-bid economic operators and state Agents.

1.3 RESEARCH QUESTIONS

The research questions aimed at projecting subject matter of the research and also to help provide possible answers. There shall be main research question and specific research question.

1.3.1 MAIN RESEARCH QUESTION

To what extent has the Cameroon government been able to regulate the prices of goods in Cameroon?

1.3.2 SPECIFIC RESEARCH QUESTION

1. What are the Mechanisms put in place to protect the consumer of goods?
2. What is the impact of such Mechanisms in the Market?

• How effective are the Mechanisms?

1. What policy recommendations could be made for reforms?

 1.4 OBJECTIVES TO THE STUDY

1.4.1 MAIN OBJECTIVE

This research aims at investigating the regulation of prices of basic commodities by the government in a bid to protect the consumer.

1.4.2 SPECIFIC OBJECTIVES

The specific objectives include;

1. To analyze the various Mechanisms used by Cameroon to Protect consumer is of goods.
2. To assess the impact of such Mechanisms in the Market
3. To verify if they have been able to guarantee fair and effective protection to consumers
4. . To propose policy recommendations for reforms

[1] Stiglitz, J. E. (2000). Economics of the Public Sector (3rd ed.). W. W. Norton & Company.

[2] Ibid

[3] Ibid

[4] World Bank. (2014). Price controls. In Doing Business 2015: Going Beyond Efficiency (pp. 40–41). World Bank

[5] Ibid

[6] Wang, Y., & Sun, P. (2014). Price regulation, market competition and welfare: Evidence from the airline industry. Journal of Comparative Economics, 42(4), 939–955.

[7] Ibid

[8] Kang, C., & Tian, G. (2014). Price regulations, market competition, and asset returns in the pharmaceutical industry. Journal of Business Ethics, 120(3), 411–427

[9] Ghosh, A., & Joshi, S. (2009). The impact of global commodity price shocks on the Indian economy: Structural versus cyclical effects. IMF Staff Papers, 56(4), 703–735.

[10] Adelaja, A., & Shiferaw, B. (2015). Urban Food Price and Policy Survey for the Accra, Kumasi, and Tamale Metropolitan Areas in Ghana. IFPRI Discussion Paper 01462

[11] Obwona, M. B. (2001). Price regulation and market structure in Sub-Saharan Africa. African Development Review, 13(2), 201–232

[12] Bigsten, A., & Kimuyu, P. (1999). Informal institutions, poverty, and vulnerability in Sub-Saharan Africa. Nordic Journal of African Studies, 8(2), 52–68

[13] Ibid

[14] Obwona, M. B. Supra

[15] Republic of Cameroon. (2016). National Regulation on the Control of Prices. Ministry of Trade.

[16] Ibid

[17] World Bank. (2017). Cameroon Economic Update: Implementing Reforms to Promote Inclusive Growth. World Bank

[18] Ibid

[19] Kang, C., & Tian, G, supra

[20] Law Nº 2011/012 of 6^th May 2011

[21] The Framework Law No. 2011/012 of 06 May on Consumer Protection in Cameroon contains only 39 articles. In foreign

Legislation, codes are intended for consumer law

[22] Reuters, 3 February 2011 p6

[23] UNCTAD is a forum where representatives of all countries can freely engage in dialogue and discuss ways to establish a better balance in the globalized Economy.

[24] Law Nº 2011/012 of 6^th 2011 on Consumer Protection In Cameroon

 Law No. 2015/018 of 21 December 2015 on Commercial Activities in Cameroon etc

[25] Law No.2006/018 of 29 December 2006

[26] Decree n ° 2009/296 of September 17, 2009