Friday 5 August 2005

Suggestions

In our recent columns we’ve covered some of the ways in which Consumer Watchdog thinks we’re either being ripped off or where consumers don’t have the protection they deserve.

We hope that readers will forgive our presumption but in the next couple of columns we’d like to suggest some solutions. Nothing we’re proposing is exactly rocket science and there’s nothing here that doesn’t exist in other countries but we really think that the time has come for Botswana for match what the others are doing and perhaps even to do what we in Botswana do best: to take the lead in Africa.

A REAL Consumer Protection Law.

Before we go into details let’s make a few things clear.

The real responsibility for protecting consumers must remain with the consumers themselves. We all have to take responsibility for our own actions and our decisions. If we knowingly sign up for an abusive finance scheme then it’s our own fault. We can’t always blame the Government and suppliers for mistakes that we’ve made.

Nevertheless we really do think that consumers deserve to operate in a market that has at least some regulation. Let suppliers charge whatever they want but let’s make them do it openly, honestly and without anything sneaky. Let’s make them tell us exactly what we’re going to pay before we sign anything. Let’s make them abide by some basic standards. Let’s make them do this under the threat of punishment!

So what should such a new Consumer Protection Law contain?

Open and honest trading

We’re entitled to honesty. The law must require suppliers to be completely honest about their prices. If a supermarket says on the shelf that the price is X then we should be paying X at the till. No excuses.

Similarly when they advertise a product at a particular price in the press then that should be the price we actually pay. Again, no excuses.

Open and honest credit

Just as importantly the law should demand that suppliers are open about finance charges, interest rates and penalties for non-payment. No excuses.

Every credit scheme must state in a standard way exactly what the charges will be. Every advertisement should say something like the following:

“The cash price for this item is P4,699. If you choose to pay on credit monthly for 2 years the total repayment will be P10,718. The total annual percentage rate is 64%.”

(Those are real figures by the way).

The law should dictate the way that the annual percentage rate is calculated so that we can make real comparisons.

We also think that there should be upper limits to the interest rates charged. We’re not naïve. We realise that lenders need to make a profit and to protect themselves against bad debt. However they should operate within the boundaries of decency. We suggested in a previous column that the maximum interest rate could perhaps be a multiple of the Bank of Botswana prime rate for long term loans and perhaps a slightly higher multiple for short-term loans. The 30% per MONTH maximum allowed by the Micro Lenders Association of Botswana is just outrageous.

Cooling off periods

We think that the law should include a compulsory cooling-off period. Any credit scheme must include a period after the contract is signed in which the customer can change his mind (Yes guys, it’s not just women that impulse-buy!). During that period the customer has the chance to calm down, make sure he’s done the right thing, pass it by his wife (or her husband) and take a step back if she has a tantrum.

Community-based lending

We think that the government should go one stage further and provide an alternative. Why don’t they encourage local, community-based lending schemes? Local communities could set themselves up as Cooperative Micro-lending Trusts. Everyone who wanted to participate could invest perhaps P10 – P100 per month into the Trust. The Trust would be hosted by the local Bank and the trustees could be local dignitaries such as the District Commissioner and some trusted local Councillors. All reports and statements would be public and audited by the Auditor General’s Office.

When people who have contributed want a loan they could approach the Trust and request a loan against the capital that has been built up. They’d pay interest but the more they’ve previously contributed the better the interest rate they get and even the highest interest rates would be reasonable and not blatant profiteering.

Then, at the end of the year any profits above inflation go back to the community investors or if they choose to it could be invested into a community facility (but probably best if it isn’t a bar!).

Yes, this could be complex but don’t government employ accountants who can help? Aren’t Kgotlas and Local Government Offices there to help communities? And isn’t it worth it to give affordable micro credit to those who need it? We realise that there are informal lending mechanisms out there already but this would include a new level of control and regulation.

This approach would take the lending mechanisms away from the loan sharks and take control back to the people. Who do we trust more? Loan sharks or our community?

Citizens Advice Bureaux

Maybe Government should establish and support the sort of Citizens Advice Bureaux that other countries have. These would be free, independent local contact points around the country that consumers can contact for advice on a range of consumer and legal issues. They could be staffed by a mixture of volunteers as well as part-time specialists such as community-spirited lawyers and accountants.

Yes, we confess that what we’ve suggested isn’t fully thought out, costed and considered in great detail. But let us know what you think! Are we on the right track?

And now the good news!

We had a fantastic response to our article last week. We mentioned Primi Piatti a few times and in response they’ve donated three P150 vouchers to our readers. We’re going to give these away to the best customer service stars YOU nominate this coming week. Tell us who makes your day when they serve you. Tell us why they deserve it and Primi will give them a meal to remember!

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