Country Report Senegal March 2011

Economic policy: Price controls are introduced

In response to rising prices and the growing social tension in more volatile areas of Dakar, the government has introduced controls on the prices of basic necessities and established new reference prices for some basic goods by decree. Thus, on February 2nd, new reference prices for 15 products, including rice, sugar, vegetable oil, onions, soap and milk, were announced by the director of internal trade, El Hadji Alioune Diouffor. The new prices implied reductions of between 8% and 15% with respect to market prices at the end of January. The effectiveness of this measure depends much on the capacity of the government to monitor what traders charge in local markets. In fact, the main union for private traders and importers, Union nationale des commerçants et industriels du Sénégal (Unacois), condemned the measure, asking instead for taxes on consumer goods to be lowered, as this would be less market distortive. Although Unacois has not openly disobeyed the measures, there are reports that the new prices are not being consistently passed on to consumers. The Ministry of Trade is sending inspection teams to verify the application of the new ceiling prices by private traders, but this is not likely to be particularly effective given the ministry's meagre resources, especially if Unacois does not fully buy into the new measures.

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