When Ghana recorded its first Covid-19 case in the Mid-March of 2020, fear and panic was everywhere. There was panic buying for essential commodities for the fear of a possible total lockdown. Prices on health related items experienced multiple spikes and volatility in the market. The novel coronavirus represents an unprecedented joint supply and demand shocks to food items, Personal Protective Equipment (PPE’s) and on global crude oil.
Prior to the Pandemic sales on hand sanitizers were as low as GHâ‚µ2 price but could cost GHâ‚µ7 in the pandemic. The high cost of sanitizers and nose masks tripled and doubled at a cost respectively. Face shields were just scarce to find one. The cost of a face shield or face cover was around GHâ‚µ25 for one and bulk sales go for GHâ‚µ20 for 100 pieces.
The media, politicians, individuals and groups blamed capitalism and the free market for the price surge. This upward pressure on prices led to Name calling including, capitalism is evil, capitalists are greedy and free market can’t work in the pandemic were common commentaries in my inbox.
In some cases, the government condemned the abnormal sanitizer price hikes telling traders and vendors it is not the best time to make profit. Others asked government to control prices and arrest those increasing the cost on PPE’s. Others believe the free market allowed the over pricing of sanitizers.
However, an increase in demand (surge in demand for health related items like PPE’s) is not a problem in a free market economy. An increase in demand in such a time is an opportunity for entrepreneurs and manufacturing companies. It brings innovation and competition on production to meet that demand.
The Beverage companies shifted production to mass production of sanitizers and fashion designers started the production of nose masks with style to provide the necessary supply to meet demand.
Currently, prices on PPE’s and other health related logistics have dropped much more lower than before the pandemic. Thanks to the market interaction and the supply side of production from entrepreneurs. The cost of a GHâ‚µ25 ($4.3) face shield is now sold at GHâ‚µ5 ($0.8) on the shelves and expected to reduce in the coming weeks.
Politicians and the media are quiet on this beautiful demand and supply of PPE’s and the innovation the market demonstrated in the pandemic.
During the early parts of the COVID-19 Pandemic, prices on health related items (PPE's) were rising and prices on crude were falling. As we are trying to live with the novel coronavirus, prices on health related items are falling and prices on crude are rising. This is because the government controls the oil prices for consumers and it is the main source of taxes to the state.
Take the state out of the enormous taxes on consumers while trying to use energy. Here, Government is the problem in the pandemic not the market forces of demand and supply.
Peter Bismark is the CEO of ILAPI