William Gumede
4 minute read
19 Jan 2008

Consumers fighting for their own interests

William Gumede

Public watchdogs have to assert themselves to protect ordinary South Africans

The scandalous increase in bread prices, at about the same time, by the main producers, cannot be just a coincidence. On Monday, Tiger Brands increased the price for a loaf of bread by 40 cents. The other big companies, Pioneer Foods and Premier Foods, say that they will also increase bread prices.

These increases are particularly galling, given that the main bread producers are currently under investigation for price fixing. Last year Tiger Brands was fined R99 million by the Competition Commission. The other big producers, Pioneer Foods, Sasko, Food Corp’s Sunbake and Premier’s Blue Ribbon were given immunity.

The bread price increase is a clear case for the Competition Commission to investigate whether any collusion has taken place between the big bread producers to artificially set the price of bread. There are certainly enough grounds now for the Competition Commission to launch an investigation into the whole milling, storage and baking value chain. The series of increases in the price of basic food, energy and interest rates have South Africans, especially the poor, reeling. So far, the regulators, watchdogs and audit bodies have not decisively investigated these increases.

Last year, the National Electricity Regulator gave Eskom the green light to increase electricity prices by 14,2%. Both Eskom’s and Telkom’s prices are so high and their services so below par that not only has it become a national pastime to complain about them, but their high tariffs also serve as a brake on economic growth. It took the public protector until this week to start murmuring that perhaps it should probe Eskom for reasons for the continual electricity outages, which increase individual hardships and undermine the delivery of basic services and economic growth.

The public protector’s constitutional mandate is to police public institutions that prejudice any individual. Surely, poor service from state institutions and parastatals falls under this category? Not only are Eskom’s and Telkom’s high tariffs a problem, the poor service to customers from both these institutions should have been investigated by the public protector long ago.

Similarly, the interest rate hikes by the Reserve Bank not only cause hardship, they also restrict economic growth. Most other central banks around the world take note of the general economic conditions and try to ease conditions when it appears that monetary policy is unduly stifling economic growth and increasing the hardships of ordinary citizens. Yet, in our case the mandarins at the Reserve Bank appear hard of hearing.

One immediate impact of the deep divisions between government and the African National Congress is that if there has been policy paralysis in the government over service delivery in the past, this is likely now to worsen. It is unlikely that there will be any semblance of decisive central government action to cushion the negative impact of things such as the increase in the prices of basic foodstuffs, as the central government and the ANC square off against each other.

Public watchdogs will now have to assert themselves and take leadership roles to protect ordinary South Africans. Sadly, the record of most audit and watchdog agencies in protecting ordinary citizens has been very poor. In the past most of them have deferred to the executive or have been soft on unscrupulous business organisations. A case in point is that large companies still get away with destroying the environment.

The Competition Commission’s fining of Tiger Brands for price fixing last year was a welcome break from the depressing norm of inaction by public watchdogs. A big problem with South Africa’s infant democracy is that there are very few organisations specifically set up to protect consumers. This is the vital ingredient missing in our constitutional democracy. Without consumer watchdogs, such as patients’ protection organisations to police hospital services, bank consumer organisations to police indiscriminate repossession of defaulters’ homes or commuters’ organisations to protest poor public transport, the democratic system cannot work properly. Of course, it is not the place of the government to start these organisations. Consumers, that is, ordinary citizens, themselves will have to become active citizens.

South Africa has a partial history of consumer organisations fighting for the interest of consumers. During apartheid, selected consumer organisations fought on behalf of unscrupulous businesses. Also, in the past, civic organisations played an important role to selectively fight on behalf of consumers. However, these civics are either not around any more or, as in the case of the South African National Civic Organisation (Sanco), have lost the plot. One contemporary example of citizens’ organisations that do appear to be working are ratepayers’ organisations. South Africans will have to develop a large number of consumer organisations, which are effective, relevant and have teeth. Or democracy is poorer without such organisations.

• W. M. Gumede is the author of Thabo Mbeki and the Battle for the Soul of the ANC.