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Commodities

Ex-CBK governor calls for cuts in utilities, food cost

Former Central Bank of Kenya (CBK) governor Njuguna Ndung’u
Former Central Bank of Kenya (CBK) governor Njuguna Ndung’u. FILE PHOTO | NMG 

Former Central Bank of Kenya (CBK) governor Njuguna Ndung’u has asked the government to provide incentives to food producing firms including those making staples like grain, flour and cereals to help lower prices.

President Uhuru Kenyatta’s administration recently rolled out a stimulus package to support businesses and individuals to enhance liquidity and reduce the impact of potential economic disruption of the coronavirus pandemic.

Some of the measures include reducing value-added tax and corporation tax.

But Prof Ndung’u said on K24 television on Sunday that additional targeted interventions including cuts in water and electricity bills would help cushion Kenyans more effectively.

“We need to go into utilities to see how we can support their prices,” Prof Ndung’u said.

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“Electricity, water, gas, fuel, paraffin. These are the things that the vulnerable groups are having problems with.”

Prof Ndung’u, who is the executive director of African Economic Research Consortium, said the expansion of existing direct cash transfers programme to include the urban poor in the face of the virus would expand social safety nets and cushion the most vulnerable populations.

“Cash transfer is the most effective…my only regret is that if the Huduma Namba was ready it would be more effective,” he said, citing a gap in mapping out the most vulnerable communities. Measures by the government to cushion Kenyans from the effects of the pandemic include a 100 percent tax relief for those earning Sh24,000 and below a month.

The CBK will face a fresh test when it holds its monetary policy meeting at the end of this month as the economy continues to be battered by the Covid-19 pandemic.

The apex bank is expected during the April 27 Monetary Policy Committee (MPC) meeting to assess the impact of a raft of measures it rolled out on March 23 to help the economy navigate the effects of the pandemic while possibly announcing new ones.

The CBK cut the benchmark rate to 7.25 percent, a policy bias towards cheaper loans.

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