Kibaki price control snub tests new legislative order

Kenyan households have recently become victims of arbitrary changes in prices of basic commodities, coming against the backdrop of a sharp rise in the cost of living especially for the low-income segments of the population.

The cost of sugar and cooking oil, for example, has nearly doubled over the past three years on what manufacturers attribute to increased cost of doing business.

Also, oil marketers have tended to raise pump prices when international trends dictate so without effecting reductions when the factors reverse.

On Tuesday, oil marketers raised pump prices by at least Sh3 per litre of petrol, a move Kenol/Kobil said was triggered by “high level manipulation of storage systems in the country.”

The President wants the Minister to determine the maximum prices of the commodities in consultation with the industry players as well as taking into account any relevant treaty or convention ratified by Kenya, making it almost impossible to have price controls because the treaties are binding and manufacturers have been opposed to them.

“The Bill was introduced without taking cognizance of the entire price chain that affects the final goods of products and thus it is totally misguided and harmful to producers of final products in Kenya, ” said Betty Maina, the chief executive officer of the Kenya Association of Manufactures in a recent column in the Business Daily.

But some economists had argued that while controls could cushion consumers, they could cause price distortions and investor flight, putting Kenya at variance with its trading partners in the East Africa Community, who have resisted attempts to regulate prices.

Finance Minister Uhuru Kenyatta had also dismissed the Bill as unrealistic, saying it would amount to reversing Kenya’s economic policy.

Manufacturers said price controls would cut down production and affect supply in the long term.

The President also however assented to other Bills with far-reaching economic and social implications including the Prevention of Organised Crime Bill, 2010 and the Alcoholic Drinks Control Bill.