The good and bad of a product boycott

One political coalition recently made an announcement asking its supporters to avoid purchasing products and services from three large firms in Kenya.

The statement itself was short. Its main argument is that the owners or management of these firms are complicit in the suppression of democracy, through collusion with the executive branch of government and the political leadership.

Irrespective of the political biases that this call for boycotts reflects, it confirms once again the folly in trying to separate political contests and policy from business activity in Kenya.

The boycott has been supported with symbolic gestures, where the press captured leaders queuing to change service providers from one firm to another.

While it is not clear that grievances related to a demonstrably poorly managed election could be resolved through the boycott of products and services of private and part private firms, this event clearly demonstrates the good, bad and ugly of Kenya’s policymaking.
To start with, individuals and groups hold views about how they should spend their money. If they are prepared to utilise the power of consumers to make a point to a firm whose behaviour they disagree with, then society must live with it.

OVERT OR COVERT

Still, this tactic can only be effective within an economy with a degree of openness because only then could it be possible for a switch in products or service providers to occur. For an economy that is replete with monopolies, a products boycott makes no sense because of the absence of real alternatives.

Thus as an instrument of commercial pressure, a boycott is by and in itself a good thing because it forces firms to compete and signals to them that consumers are sovereign in a market place.

But any alert Kenyan knows that the specific firms targeted bear immense political symbolism. I have deliberately avoided mention of these firms but the message of the boycott call is that their owners are either directly connected to politicians or that the said firms have political preferences and they aid the incumbent administration through mendacious communication under the guise of private sector leadership.

Some are accused of active involvement in determining the result the last presidential contest. This is the bad part of a boycott, especially since it creates an association between a firm and specific politicians.

In a sense, the call for boycotts as faced in Kenya today expands the domain of political competition directly into markets, and specifically to a trio of firms which benefit from overt or covert association with politicians.

It is interesting that the firms targeted by the Nasa boycott have made no statements to address the charges against them.

OBJECTIVITY AND BELIEVABILITY

While there may be wisdom in this, the separate responses issued by the Communications Authority of Kenya and the government spokesperson were unbelievably partisan and confusing.

For instance, the Communication Authority’s statement was not just incoherent but put a firm under political attack right into the crosshairs of angry consumers.

I reviewed the specific statute that informed the formation of the Communications Authority as a regulator and couldn’t find any clause that permits it to respond to political contests.

Secondly, the Government of Kenya has direct board seats in one of the targeted telecommunications firms and it is not a regulator’s role to bring this issue of conflict of interest right to the fore by appearing to oppose a boycott, which may be unfair, by releasing statements that patently support one firm.

Ideally, nobody should purchase products or services based on the preferences of political formations but such changes should not be the subject of a formal memorandum from the telecommunications services regulator.

One immutable principle of regulatory conduct is the ability of a regulatory body to express independence, objectivity and believability.

Based on its latest conduct, it is difficult to convince a dispassionate observer that the leadership of the Communications Authority of Kenya acted independently, while treating competing firms equally.

PAID BLOGGERS

My free advice is that an assured regulator ought not to demonstrate nervousness when consumers change service providers in the industry under its watch.

Pray, it is not the regulator’s job to keep consumers where they are today, indeed it is expected that they would want the choice to move to exist, even if it ought not be driven by political considerations alone.

The incumbent administration ostensibly trumpets commitment to law and order even when judicial decisions hurt badly.

Missing from all the communications in formal and informal channels was a reference to Section 98 of Kenya’s Penal Code which expressly proscribes economic boycotts that may “bring the economic life of Kenya into jeopardy”.

That this claim has not been made may suggest that government notes that the call for boycott of selected products would not have that effect to warrant prosecution of those who call for or participate in it.

While I doubt that the charges would hold in court, this would be a far better argument to plead before the public than incoherent statements by paid bloggers who cannot spell, and clueless bureaucrats issuing press releases.

Kwame Owino is the chief executive officer of the Institute of Economic Affairs (IEA-Kenya), a public policy think tank based in Nairobi. Twitter: @IEAKwame