Rethink free market on services

By Peter Nyanzi

Poor regulation hampering Uganda’s anti-poverty, corruption fight

Recently, two friends on Facebook posted updates which provoked intense debate. One was a scanned copy of a school fees bank slip, which indicated that the parent had paid Shs1.7 million for a Primary Six pupil. The other related to a family that had paid Shs2 million for a normal delivery at a Kampala hospital.

It was interesting to see many of the contributors to the debates saying they did not see any problem with both situations because ours is a liberalised economy and those who can afford those services go for them in line with the forces of demand and supply, while those who can’t “find their level.”  But shouldn’t there be a basis and parameters for determining the charges to be paid, even in a liberalised economy, especially for indispensable services like health and education? Would a cost-benefit analysis justify the hefty sums that were paid by the new mother and the pupil in comparison to other service providers in the same range? No one knows.

Apparently, the government does not want to get involved under the excuse that this is a ‘liberalised’ free market economy. I want to suggest that the government is shirking responsibility, and exposing citizens to the deadly fangs of capitalism and the ravenous bellies of profiteers. I will contend that every responsible government has a big role to play in protecting vulnerable citizens/consumers from exploitation by the business community.

Most governments do this through functional regulatory frameworks. Unfortunately in Uganda’s body politic, liberalisation has been made almost synonymous with de-regulation. I think this is unfortunate and could be responsible for the situation whereby the consumer has been left exposed to unscrupulous business practices.

Even in the few situations where they exist, many of the regulatory mechanisms in Uganda are dysfunctional. This engenders a laissez-faire style in the management of public affairs.

Yes, we all know that the government is pursuing a private sector-driven system of economic development. However, the government must also understand that it has the mandate to protect its citizens from negative business practices and vulnerability. That is why in some countries including our regional counterparts, the maximum prices charged on vital consumer goods including fuel and bread are set by the government.

This is intended to protect the population. Of course we might not have to reach that extent, but it does show that while every government must be a friend of business, it must not lose sight of the public. It must ensure that both are protected and not just one at the expense of the other. This dual role necessitates the putting in place of rules, regulations and procedures, plus providing the consumer with as much information as possible so as to enable the making of informed decisions. By this, the government’s role benefits both business and the consumer.

I will specifically dwell on ensuring the availability of accurate and reliable information, which is a major gap in our service provision systems.

Uganda does not have concrete regulations pertaining to marketing and advertising information, which leaves the consumer exposed to dishonest, deliberately misleading, and wrong information about their services. In many cases, some schools cannot back up the claims they make in their adverts with evidence.

Some use media reports of their ‘excellent’ academic performance to create artificial demand, thus getting the leeway to hike fees. We all know that businesses exist to make profit and eventually wealth for their proprietors – and the more they can make at least cost the better for them. To check this, government agencies must be firm enough to act as watchdogs to ensure that business practices are fair to the consumer and don’t expose the public to unwanted consequences, unreasonable prices, and preposterous charges.  On the other hand, these regulatory measures benefit the business community as they protect bona fide and hardworking enterprises from unfair competition.  Now, back to our profiteering private schools and medical facilities. No one knows the criteria used for determining how much fees the schools or medical facilities should charge.

It’s not easy to know what value one is actually paying for. I want to suggest that these obnoxious charges are a major contributor to the high poverty levels in Uganda and even corruption in public office. Money that should have been used to develop the household is unnecessarily spent on school fees and hospital bills. What will stop a parent from soliciting bribes to get the exorbitant fees? Who knows why boarding primary school A charges twice the amount charged by boarding primary school C? Why does clinic X charge twice as much for the same procedure as clinic Y? Should the schools and hospitals be free to charge as they please because we operate a ‘willing seller, willing buyer’ system?

I think the government has a role play here. One way to do it is by putting in place a functional and water-proof grading system. As part of the licencing procedures, every school or medical facility can be graded in line with the facilities it has on offer. A data base accessible to the public can then be produced showing how the various schools are graded possibly with suggested fee structures in relation to the value that will accrue from consuming the service.

The database could be upgraded annually basing on inspection reports and surveillance by the authorities. This could be extended to other sectors such as hotels, restaurants and even transport services. Otherwise, what we have on our hands now is a situation whereby consumers are getting a raw deal, being offered Grade C services at Grade A prices. This is not only unfair to the schools that have invested heavily to offer good services but also to the consumers who don’t get value for their hard-earned money. It is only natural that some proprietors will want to resist this system but I think it will be for the good of everyone.

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Peter Nyanzi is a journalist

Contact: pnyanzi@independent.co.ug