Company Industry
CBK boss sees price control hurting production, supply
The architect of the Price Control (Essential Goods) Bill, 2009 Ephraim Maina wants to protect Kenyans from cartels that manipulate the forces of demand and supply to suit their profits. Photo/FILE
The clamour for price controls on essential goods could cut down production and affect their supply in the long term, the Central Bank of Kenya (CBK) Governor Njuguna Ndung’u has warned.
Prof Ndung’u also said if effected, the price controls would amount to a “retrogression” in government policy following liberalisation of the economy in the 1990s.
“Price controls can only benefit consumers in the short term because in the long term there will be no production,” said Prof Njuguna.
Parliament passed a resolution last week allowing government control of prices of essential commodities such as food and fuel , arguing the new law would protect Kenyans from exploitative traders.
The Communications Commission of Kenya (CCK) has also warned that it intends to introduce controls on internet prices in a bid to bring down costs which have remained static even after the landing of two undersea broadband cables this year.
Mr Njuguna however said the long term solution to high commodity prices is to address constraints that add to production costs and inflate the market price of goods and services.
The Price Control (Essential Goods) Bill 2009 is the brainchild of Mathira MP Ephraim Maina.
It sailed through its first reading in Parliament and it now awaits debate at the committee stage where MPs may propose amendments.
Passage of the Bill without substantial amendments will however pave way for establishment of rules to require the Minister for Finance to fix the maximum retail and wholesale prices for the select goods.
Mr Maina said government intervention was necessary since reliance on market forces was hurting low income groups.
“It has become critical to control the prices of the listed goods to protect Kenyans from exploitative and unscrupulous business persons,” he said. “This is a poor man’s Bill.”
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