All regulations have a cost, but you just have to balance the cost with the benefit says Reg Rumney, head of the Centre for Economics Journalism in Africa. He says business is always concerned about new laws such as the Consumer Protection Act because they do “add a layer of cost”.
All regulations have a cost, but you just have to balance the cost with the benefit says Reg Rumney, head of the Centre for Economics Journalism in Africa. He says business is always concerned about new laws such as the Consumer Protection Act because they do “add a layer of cost”.
He named the simple example of complying to the labelling law where employing an extra person to label ingredients pushes up product prices.
“Can we afford it? On the balance, we probably can because benefits probably outweigh the costs of consumer protection,” he says about South Africa, which has a poor history of looking after customers.
Rhodes University Law Clinic candidate attorney Johan Barnard believes consumers may also end up paying higher prices to cover legal costs of suppliers who are taken to court. Rumney, however, is not sure that the Act would lead to any damaging legal action because South Africa is “not a particularly litigious society”.
Will the cost of enforcing the Act by government affect the taxpayer’s pocket? Rumney says much depends on how the Act is implemented.
“If they don’t have people checking on businesses, the implications won’t be that great.” He added even modest amounts spent by government, “do add up”, and that it is hard to know with all laws what the unintended consequences will be.
At the time of going to print, the Department of Trade and Industry (DTI) could not be reached for comment about the economic impact of the Act.
