CFTC proposes extra budget funding

CFTC Executive Director, Lloyds Vincent Nkhoma

* The funds allocated to CTFC are not enough to cushion the price of fuel and mobility challenges the Commission faces in undertaking its duties

* Basically, this is a standard process where we annually come to present our budget and showcase to Parliament what we have achieved the previous year

* We have agreed for another meeting next week where they will indicate how the extra money will be used

By Levison Lester & Patience Longwe, MANA

Competition & Fair Trading Commission (CFTC) has asked the Parliamentary Cluster Committee on Industry, Trade & Tourism and Media, Information & Communication to lobby government for extra funding amounting to K400 million if the Commission is to serve Malawians better and effectively.

CFTC Executive Director, Lloyds Vincent Nkhoma disclosed this in Lilongwe on Thursday after he appeared before the cluster Committee and he justified the adjustment, saying funds allocated to CTFC are not enough to cushion the price of fuel and mobility challenges the Commission faces in undertaking its duties.

“Basically, this is a standard process where we annually come to present our budget and showcase to Parliament what we have achieved the previous year,” he said.

“We also lobby for additional funding if needed by showcasing the programme base focus of what we want to achieve as a Commission.

“Treasury has given us a budget of about K1.51 billion but looking at the programmes, and issues of currency alignment which has happened, and for us to be effective and deliver our mandate, we are proposing for additional K400 million to cushion some of the issues on our work,” he said.

Nkhoma added that apart from easing mobility challenges, the request for extra funding to the current budget allocated by Treasury is justifiable as it will help in staff recruitment.

On her part, co-chairperson for the Parliamentary Cluster Committee, Susan Dossi said the lobby for extra funding will happen only if CFTC clearly indicates how the proposed funding will be utilised.

“As a cluster committee, we were informed by CFTC that the budget announced last week is not enough and have asked us to lobby government for extra funding.

“Unfortunately, they have not indicated what they want to do with the extra funds. So, we have agreed for another meeting next week where they will indicate how the extra money will be used,” she said.

Soon after the devaluation of the Kwacha by the Reserve Bank of Malawi (RBM) in November, CFTC was stretched to the brim after President Lazarus Chakwera directed the Ministry of Finance; Ministry of Trade & Industry; and the CFTC to investigate all price increases for any sign of unfair trading practices.

After it was observed that indeed some traders were using the devaluation as a scapegoat to exploit consumers, CFTC and the Ministry of Trade & Industry intensified its investigations across the country and pledged to be on high alert going forward — thus the need to boost its operations.

The CFTC has always indicated that the challenges they face include low staffing and inadequate financial resources to cover the whole country.

In the past year, the CFTC has also been engaging with the private business sector in its soft enforcement through advocacy to nip in the bud unfair trade practices of its mandate, in which it has been encouraging companies to develop compliance policies — a initiative that also needs adequate resources.

At the annual Leaders’ Summit in Mangochi in May last year, Nkhoma told the delegates they CFTC is never happy to investigate and order fines against businesses that have flouted regulations while stressing that the consequences of failing to comply with competition and consumer protection law are serious.

Thus he encouraged that all businesses should ensure that they have adequate policies and procedures in place for early detection in order to address the danger areas and to look at how their firms relate with other competitors, such as horizontal agreements to put in place procedures that prevent members of staff from participating in conducts that would constitute collusion.

Nkhoma also impressed on the companies on the need to look at how their firms relate with downstream players such as customers and suppliers and avoid agreements that undermine other suppliers or exploit customers and consumers.

At another indaba on the sidelines of last year’s International Trade Fair at Chichiri in Blantyre, CFTC engaged financial service providers — commercial banks, insurance companies, mobile money service providers and micro finance institutions — who were alerted of complaints being received from consumers.

They included suspected collusive conduct, through uniform pricing of interest rates; deposit rates, lending rates and interest rate spread, saying it appear there are some tacit collusion.

Others were financial scams/fraud; dubious Sim-swaps and account hacking; customers’ money fraudulently transferred from bank accounts; and weak security parameters for electronic funds transfers platforms.

Also being complained of was non-disclosure of material information especially when marketing loan packages where the terms & conditions are indicated that they shall apply but are usually in very unreadable small print fonts.

There is also frequent inaccessibility of e-financial services that include poor access to ATMs and electronic payments services due to network problems and also concerns on management of dormant customers’ accounts in which there is continued charges on dormant accounts without any cut-off point where the customer is not paying premiums;

Consumers are also complaining of being charged for failed transactions where cash is not dispensed on other banks’ ATMs and that inter-bank ATM withdrawal fee is usually not refunded.

There was also delayed reversals on failed transactions or mistaken transactions that can take up to 5 days for commercial banks  and 2 days for mobile money — and sometimes no refunds for failed transactions on inter-bank ATM withdrawals.

High interest rates on loans was also raised, where there are gaps in huge interest for commercial banks while micro-finance institutions’ interest rates are also high and charged monthly.

Some of the promotions the financial services flighted were reported to be misleading and deceptive advertising and that offer prizes with no intention of supplying them and that prizes may not be awarded in a transparent manner.

They are also weak and ineffective complaints handling mechanisms that include failure to timely and effectively redress complaints.

Thus Nkhoma — while emphasizing that their mandate include soft enforcement through advocacy like the business session with the financial service sector as well as through public awareness — warned that the consequences of failing to comply with Competition and Consumer Protection Law are serious.

A few days ago, CFTC indicated that, after conducting a number of market surveillance activities and made some discoveries on unfair trading — that include the hoarding of sugar that led to its scarcity on the market — an investigations report was submitted to the Commission’s Board for its determination and once done the media houses shall be engaged to disclose the determinations to the public.—Additional reporting by Duncan Mlanjira, Maravi Express