Ghanaian pricing culture: Implications for consumer protection, competition safeguards

“People of the same trade seldom meet together, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.”-Adam Smith

Over the past month, the Ghanaian cedi has been on an impressive rebound  (appreciated by approximately 24.1% ) against the U.S. dollar, signalling a potential relief for consumers battered by years of inflation, currency depreciation and persistent price hikes. But that hope has largely remained a mirage.

Traders and businesses across the country have refused to allow the appreciating currency to reflect in reduced prices for goods and services.

What should have translated into lower living costs has instead become a glaring display of a deep-rooted market distortion — one shaped by opaque pricing practices and weak consumer protection.

The Ghanaian economy is overwhelmingly informal, with an estimated 80–90 per cent of businesses operating outside formal regulatory structures.

Prices are rarely set through transparent mechanisms or market-driven competition. 

Instead, they often emerge from a mix of cost considerations, speculative instincts, and, increasingly, collective agreements by traders' associations.

It’s no surprise then that prices in Ghana are famously “sticky downwards” — a term economists use to describe how prices rise quickly but fall very slowly, if at all. 

Pricing without logic:  Excessive margins

Pricing of goods in our markets defies fundamental logic.

The universally accepted pricing model, the cost of goods + cost of sales + profit margin, seems not to apply to Ghana’s trade landscape.

Anecdotal and empirical evidence suggest that some businesses apply profit margins that are sometimes three to four times the cost of goods.

This is not only exploitative but also defies the logic of a competitive market, where average profit margins should reflect efficient costs and fair returns.

This pricing culture is enabled and, in some cases, institutionalised by trade associations also called “Chamber.” 

These groups have, in practice, become informal price-setting bodies.

They coordinate pricing strategies, resist competition, and aggressively oppose market entrants, particularly foreign traders.

The frequent skirmishes between GUTA and Nigerian traders is a case in point.

Nigerian traders often sell goods cheaper than Ghanaian traders.

GUTA’s resistance to their presence is not driven by national interest, but by a desire to maintain price monopolies and suppress competition.

To further compound matters, GUTA is now advocating a 60-day grace period before adjusting prices downward in response to the appreciating cedi.

This is both unjustified and harmful. Some traders are currently clearing goods at exchange rates of GH¢ 11.80 to the dollar, but continue to price them as though the rate were GH¢ 15.

Let’s be clear: the moment trader associations start announcing across-the-board percentage price reductions — 10 per cent, 20 per cent or 30 per cent — they have effectively crossed into the territory of price coordination, if not outright price fixing. In a competitive market, pricing decisions should be made independently by each business.

Any collective agreement undermines competition, distorts pricing signals and harms consumers.

Cost cartelisation: Cement case study

Cement pricing in Ghana is a perfect illustration of the entrenched dysfunction. Despite the cedi’s appreciation, cement prices have paradoxically increased.

This defies logic and economic fundamentals, raising serious questions about possible cartel behaviour in the sector.

Last year, the then Minister for Trade and Industry attempted to regulate cement prices — a move that, while well-intentioned, missed the real problem.

The issue is not the absence of regulation per se, but the lack of competition and oversight in key sectors of the economy.

Misdiagnosing the problem only leads to ineffective remedies.

Market without guardians: Consumer, competition laws?

At the heart of this pricing crisis is a systemic failure to protect consumers and uphold competition.

Ghana still lacks a comprehensive Consumer Protection Act and an effective Competition Law. 

In their absence, there is no institutional mechanism to investigate anti-competitive conduct, sanction abusive pricing, or protect the average consumer from market manipulation.

Trade associations have become so powerful, and the Ghanaian consumers have been left with no regulatory and legal safeguards.

Best practices, solutions

In the first place, the government must fast-track the enactment of the Consumer Protection Act and the Competition and Fair Trade Practices Act.

The recent announcement in the 2025 Budget Statement regarding the imminent passage of both laws is commendable.

Without these two laws in place, the Ghanaian consumers will never get a fair deal in the marketplace.

Consumer Protection and Competition authorities are empowered with investigatory, enforcement and sanctioning powers similar to those found in jurisdictions such as South Africa, the United Kingdom and the European Union.

These countries have used competition law to expose cartels, challenge dominant firms abusing their market position and drive prices down to benefit consumers.

Secondly, the Ministry of Trade, Industry and Agribusiness and the Ghana Statistical Service (GSS) must enhance market transparency.

The GSS should be tasked with monitoring and publishing indicative price ranges for essential goods.

This includes tracking products from port to market and factoring in import costs, taxes and reasonable industry margins.

Transparency helps correct information asymmetry, empowering consumers and deterring exploitative pricing.

Finally, in markets where there is no competition to bring down prices, the government can spur competition by removing entry barriers and facilitating new entrants to help drive competition.

Conclusion

Consumers have been left voiceless for far too long. It is time for policymakers to rise to the challenge by passing strong legal frameworks, empowering institutions and creating an economy where businesses compete fairly, prices reflect economic realities and consumers get the value they deserve.

Because in the end, the health of any economy is measured not by the profits of the few, but by the welfare of the many.

The writer is a lawyer/competition economist/consumer protection expert.

He is the West Africa Regional Director of CUTS International.

E-mail: apa@cuts.org