The parallel existence of markets and states had ever been contentious. Whereas market fundamentalists advocate for the exclusion of the state from the market, conservative statists struggle to control the market in every dimension. Balancing the two economic forces remains the prime challenge for policy makers even in the 21st century.

Market volatility continues to disrupt economic stability in Ethiopia it is even gaining momentum as each day brings policy surprises. Agencies established to regulate the market exist in the shadows of passivity. In lack of collective voice, consumers shoulder the burden of supply shock and inflation. Institutional establishments such as the Trade Practices and Consumer Protection Authority (TPCPA) stay dead silent amid the turbulence in the market.

Mentioning its rare effort to create institutions, the government claims that its emphasis is more on restructuring the market than controlling instantaneous instabilities. In view of institutional activity, however, there is no result to be proud of. Systemic vulnerability prevails and the risk of price volatility mounts. For the government, the root of all the problems is oligopolistic market structure that restrains decentralization and competition. Reforming the market would be vital if the ever increasing risk of price volatility has to be properly regulated.

Critics would not buy the government’s arguments as most think that both structural and non-structural issues should be taken into account in policy making. They argue that reducing the inflationary burden of the consumer would be imperative to mobilize enough societal support for market restructuring. Besides, some argue, any rational consumer would be thinking about today. They argue that economic policy making should provide a sufficient level of attention for temporary shocks and structural imbalances.

The government counteracts in saying that resource availability would limit comprehensive ex ante and ex post market regulation. So far as the problem would not be solved easily, tailoring resources would be wise to obtain optimal result. Apparently, ex ante regulation is by far the cheapest choice. The ideals of both impact and cost effectiveness would indicate that emphasizing on the structural issues is the right policy decision.

For the critics, such a policy choice is unwise for two reasons. The whole task of policy making should not be taken as choosing between short and long term objectives, they claim. It rather involves creating a good balance between the two. Lopsided policy making reveals incompetence, they argue. Similarly, institutionalization would not be a panacea for the market problems alike preferential policy making. Hence, the choice in both ways is unwise.

Driven by structural vulnerabilities and seasonal price volatility, the country level 12 months moving average inflation has remained within the double digit rate since 2007. Annual average inflation had been 11.6pc in 2007/08. It elevated to 21pc in 2008/09, showing an increment of 86pc year on year. Despite its decline in the years after 2009, it stays too close to 19pc, in 2011. Although the economic pie continues to expand, it is being dwarfed by the comparative rise in inflationary pressure.

Self-denial has been the response that the government has extended to the rather perennial economic hitch. It provided deaf ears for monetary conservatives that look for strict monetary policy. Instead, fast expanding monetary policy aggravated the impact of the price rise on the poor section of the society.

Compounded with seasonal consumer price variability, broad money growth has placed a huge burden on the economy. Certainly, consumers were the powerless victims of the spiraling aggregate price. Businesses were also victims, albeit marginally, as the price rise disguised consumers and reduced sales volume.

It is in context of such turmoil that the government established an authority responsible for overseeing trade practice and consumer protection, in 2010. The prime objective for the establishment was to look after any abuse of market dominance. It was also meant to flatten the competitive playing field and enhance the rate of business entry. As far as the conventional rhetoric goes, the authority is the guardian of free market economic system in the country.

After one and a half years of establishment, however, its presence is hardly felt in the system. Market decentralization is far off. Circumventing the monopolistic culprit remains a pipe dream. Not that the market is unresponsive to regulatory measures but the agency is dismayingly passive. Its reactivity hindered it from catching up with the evolving market.

Going out of its way, the authority acts as a market stabilizing force and distributes consumer goods through its extensions at a local level. In so doing, it erodes its legitimacy. Even then, it acts late. Often, it even pushes the market into chaos.

As the current market for sugar, edible oil and wheat flour clearly shows, the role of the authority is more disruptive than stabilizing. The on again and off again supply of these basic commodities has been exacerbated with lack of proactive market regulation. As the highly anticipated holiday approaches, the market is astonished by shortage.

Long lines at bakeries are vivid evidences of constrained flour supply. Shortage of sugar in the different parts of the country would also complement the fact that the market is by far unstable. Similarly, flourishing black markets of edible oil signify unabated disequilibrium.       

No trace of the consumer protection authority is visible within the scene. To prove critics right, the institution failed to provide the necessary regulatory guarantee for the consumers. Hence, they bear the burden of transferable price risks. No doubt that the level of risk would increase with rising inflation, which has reached 39.2pc in July, 2011.

As unlikely as taming inflation to the single digit seems to be, at least in the short term, no opportune time would come for the authority to establish legitimate presence within the system.

At the heart of the institutional reactivity lays poor knowledge of the market. The authority is founded on scanty information about the structure of the market. Disaggregated information about each of the consumer goods and services is not easily available. Coordination between responsible government agencies is so poorly developed that full-fledged knowledge of the market is distant.

Seasonal regulation is another challenge that made the authority inefficient. In line with the conventional practice, the authority has adopted the trend of fire fighting. It only acts after the market has gone awry. Populist politics overwhelms its planned undertaking. Yet, it all goes at the expense of the consumer; the very actor that it was meant to protect.

Smooth operation of the market could materialize only if the status quo could be transformed to proactive governance. This would demand creating resilient consumer protection authority whose principal strategy is natural evolution.

The authority should regulate by evidence. Establishing a comprehensive data base of the market for each of the consumer goods should be the primary objective. Noting that successful oversight builds up on information, obtaining the necessary human capacity to generate and analyze market information should the entry point.                      

The authority should also institute permanent market monitoring system. Avoiding regulatory seasonality should be one of the legacies of the authority. This would reduce market surprises and price shocks. Indisputably, it is only through consistent monitoring that markets could be stabilized.

Bridging the coordination gap between relevant government authorities should also be amongst the strategies. Cost of regulation could significantly be reduced by avoiding duplication of efforts. The authority should live up to this contemporary challenge.

Eventually, no better holiday could exist without stable markets. Creating such a system would obviously calls for proactive governance. Uncertain is how mere institutionalization of consumer protection could achieve it.