Rethinking the state’s price control role amid liberalisation – 5

By Anna Tibaijuka

This series began with a simple question: after nearly four decades of economic liberalisation, what is the proper role of government in determining prices?

The discussion has taken us from the transition away from administrative price controls, to agricultural producer prices, consumer price regulation and, finally, to the principles that should guide government intervention in markets. One final question remains: Who ensures that these principles are respected?

The answer lies in one of the least understood, yet most important, pillars of a liberal economy—the system of fair competition.

Markets do not function efficiently simply because buyers and sellers exist. They require rules that ensure competition remains open, transparent and fair. Without those rules, markets can be distorted by monopolies, cartels, collusion, abuse of market power or unfair trade practices.

Equally, well-intentioned government intervention can unintentionally weaken competition and reduce efficiency if not exercised within a clear legal framework.

The purpose of competition law is therefore not to prevent business success. It is to ensure that success results from efficiency, innovation and fair competition rather than monopoly power, collusion or administrative privilege.

This is the role of Tanzania’s Fair Competition Commission (FCC).

Unlike sector regulators such as Ewura and Latra, which supervise particular industries, the FCC has a broader economy-wide responsibility. It promotes and protects competition, investigates anti-competitive conduct, reviews mergers that may substantially lessen competition, combats unfair trade practices and protects consumers against misleading market behaviour.

Its mandate extends beyond protecting consumers alone. Competitive markets also protect producers.

When several buyers compete openly for agricultural produce, farmers enjoy stronger bargaining power. When businesses compete fairly, consumers benefit from better prices, improved quality and greater choice.

When investors compete under transparent and predictable rules, confidence in the economy increases. Competition therefore benefits producers, consumers, investors and the nation as a whole.

One important lesson emerging from this series is that government should protect competition rather than individual competitors.

A business that loses customers because another enterprise has become more efficient has not necessarily suffered an injustice. Competition inevitably rewards innovation, lower costs and better service. Public policy should therefore encourage enterprises to become more competitive rather than shielding them from legitimate market rivalry.

At the same time, competition itself requires effective public oversight. Where monopolies abuse market dominance, regulators must intervene. Where businesses collude to fix prices or divide markets, competition authorities must act.

Where consumers are deceived through false or misleading claims, the law must provide protection. Strong competition policy therefore complements—not contradicts—effective sector regulation.

The relationship between sector regulators and the FCC is particularly important. Regulators such as EWURA and LATRA possess specialised technical expertise within their respective sectors and establish the regulatory rules governing those industries.

The FCC provides a broader safeguard by ensuring that market practices remain consistent with the principles of fair competition and consumer welfare established under Tanzania’s competition laws.

Neither institution replaces the other. Together, they strengthen confidence in Tanzania’s market economy.

An equally important, though less widely appreciated, institution is the Fair Competition Tribunal (FCT). Established under the Fair Competition Act, the Tribunal serves as an independent appellate body to hear appeals arising from decisions of the FCC and, where provided by law, decisions made by certain sector regulators. Its existence reinforces one of the fundamental principles of a liberal economy: administrative decisions should not be the final word where legal rights and commercial interests are affected.

Businesses, investors and consumers who believe that regulatory decisions are inconsistent with the law or the principles of fair competition have access to an independent forum for review.

This strengthens public confidence in regulatory institutions, promotes consistency in decision-making and assures both domestic and foreign investors that commercial disputes can be resolved through due process and the rule of law.

This institutional framework is becoming increasingly important as Tanzania prepares to implement Vision 2050.

The Vision seeks to transform Tanzania into a modern, diversified, competitive and inclusive economy. Such an economy cannot depend upon administrative price controls alone, nor can it rely upon markets operating without effective oversight.

It requires institutions capable of balancing enterprise with accountability, competition with consumer protection and private initiative with the public interest.

Experience around the world demonstrates that sustained economic transformation depends less on governments determining prices than on governments creating conditions under which competitive markets flourish. That requires predictable laws.

Independent sector regulators. An effective FCC. An independent FCT. Efficient infrastructure. Transparent taxation. Secure property rights. Reliable courts. And confidence that all market participants compete under the same rules.

Nearly 40 years after Tanzania embarked upon market liberalisation, the challenge is no longer to choose between the state and the market. That debate belongs largely to history. The challenge today is to ensure that both work together through strong institutions, fair competition, independent regulation and the rule of law.

Only then will markets serve producers without exploiting consumers, reward enterprise without encouraging monopoly, and promote economic growth that is both efficient and equitable. That is not simply good economics. It is good governance.

And if Vision 2050 is to fulfil its promise, fair competition will not be a peripheral issue. It will be one of its indispensable foundations.

Prof Anna Kajumulo Tibaijuka is a former Tanzanian Cabinet minister and former United Nations Under-Secretary-General and Executive Director of UN-HABITAT