Tuesday, August 21, 2007


Government should make curative laws
August 21, 2007
The collapse of Uganda’s air industry in the mid 80s has for several years caused tremendous suffering to the ordinary traveller. There is a sense of isolation and abandonment among passengers especially those who ply the Entebbe -Nairobi route following the increased trade and cooperation in the East African region.

This malaise has contributed to the monopoly now being enjoyed by Kenya Airways much to the chagrin of the Ugandan passengers. A catalogue of problems associated with flying Kenya Airways is well documented.

These include delayed departures and arrivals, overbooked passenger schedules, passengers being subjected to long hours in transit, missed flights, let alone lost baggage.

Monopolists are known the world over for their exploitative tendencies and Kenya Airways’ unfair treatment of their Ugandan clientele doesn’t come as a surprise to many. For instance there is a huge price differential for passengers flying the now lucrative Entebbe-Nairobi route who pay $500 dollars compared to those flying the Nairobi-Mombasa route which costs $150 and yet it's the same distance.

This exploitation borders on criminality. Mr Daudi Migereko, while still minister of tourism, raised this matter but no action was taken. It’s a fact that our economy is liberalised and therefore government has no business in fixing prices. However, in situations of monopoly the authorities are obliged to intervene and ensure monopolists don’t apply their dominant positions in the market to the disadvantage of the consumers.

This is a huge problem which is not only limited to the air industry. Ugandans still have fresh memories of what happened at the advent of the mobile telecommunication industry in the mid 90s.

The same scenario can be said to be obtaining in the Shs2.4b Chogm awareness fiasco where two private companies employed their dominant positions to seal the Chogm publicity deal and effectively cut out competition.

Now the public is up in arms questioning the decisions of the Uganda 2007 Commonwealth task force and their agents, for placing mug-shots of Disc Jockeys (DJs) and artistes-- some of whom are not known beyond their audiences in the environs of Kampala-- on billboards meant to showcase Uganda's rich heritage. A whopping Shs400m has already been spent on these poorly thought-out undertakings.

Former presidential candidate Dr Abed Bwanika recently said the current bill-board scandal portrays the organisers as being too busy to be creative. But one may ask, being busy doing what? Given the sums of money involved, your guess is as good as mine.

The Ugandan public has suffered for too long at the hands of monopolists. Government must develop a body of legal and economic principles to regulate dominant market players. The antitrust law should be crafted in the context of the new East African Community dispensation, which allows for fair trading and business practices among the partner states.

Since President Yoweri Museveni has always played the Asian card to champion his development policies, we can still borrow a leaf from some countries in Asia.
Indonesia’s current competition policy seems to seek a balance between prevention of monopolistic behaviour and protection of small-scale businesses (fair competition) on the one hand, and facilitation of corporate restructuring which may involve mergers and acquisitions without hurting the consumer, on the other.

In Indonesia there is no specific law on competition per se but the country still manages to prevent 'unfair competition' through rules embodied in the law governing the creation and operation of companies. The rules prohibit mergers and acquisitions that result in monopolistic practices (1995 Law No.1); and rules (1995 Law No.9) that authorise the government to prevent the formation of a monopolistic market restructure.

Other rules have been established to set out procedures for mergers and acquisitions all designed to protect the public and small businesses from the bullying dominant companies.

Malaysia is in a process of drafting a Consumer Protection Bill. This legislation is intended, among others, to give confidence to investors both foreign and domestic that they will be protected from anti-competitive behaviour by incumbent dominant enterprises.

The Bill also seeks to restore public confidence that abusive and monopolistic behaviour will not be the outcome of the transition to a market economy. Uganda needs to take this route to address the imbalances in trading patterns in those sectors where there is no competition. In business and trade the rights of the consumer are paramount.
The writer is a journalist and advocate
0772 43 46 77.

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