Competition, not regulation will protect consumers
Last updated on 7 Aug 2012 00:00
BY XN IRAKI
The Consumer Protection Bill has brought into fore the confluence of politics and economics.
In moving the Bill, Gem MP Jakoyo Midiwo has pitted himself against the invisible hand of the market.
The Bill comes at a time Treasury is planning to slap VAT on some otherwise zero-rated essentials.
But is removal of VAT on essential goods part of consumer protection? Hardnosed economists note that taxing items with low elasticity of demand like food is a sure way of raising government revenues.
Midiwo feels that the consumer has not been protected and is left at the mercy of the market. He is right; the government comes in where markets fail. He gave several examples of market failures supported by several MPs.
Picking out interest rates, he argued that the government channels money to the poor through these banks, but they charge interests rates way above the prescribed 8 per cent.
Midiwo sees amendment of the Finance Bill as the remedy to this problem. His thinking is that if we capped interest rates in government-controlled banks, other banks will follow.
His reference to foreign banks is interesting, calling them exploiters, yet we license them and buy their shares. His connection to hoi polloi through underweight meat, high matatu fares will resonate very well in penultimate year to polls.
The MP also alludes to misrepresentation of information popular in adverts and contracts.