By Francis Ngige and Morris Aron
The architect of the recently enacted Price Control Bill claims that there is an attempt by certain manufacturers to blackmail the Government to have the law repealed.
Mathira MP Ephraim Maina said he was aware that some traders were planning to horde essential commodities and create an artificial shortage in a bid to show that the legislation was unworkable. Maina said investigations into some of the businesses in the food sector had revealed that some unscrupulous traders were making profits as high as 300 per cent.
Giving an example of the Government's decision to allow some millers to import maize for subsidised flour when the price soared, Maina said very few Kenyans actually got the subsidised flour. "We heard that there was supposed to be maize flour for Sh50. How many Kenyans benefitted from it? Very few I guess. The Government needs to rein in on these unscrupulous traders," he noted.
Yesterday, Agriculture PS, Romano Kiome, threw his weight behind President Kibaki's decision to sign the Bill into law. Speaking at a function attended by agriculture specialists from the World Bank, European Union and other countries to chat a way forward on food security, Kiome said laws controlling the prices of essential commodities are common the world over.
"The guilty ones are afraid of the new law and are all over the media voicing their opposition," said Kiome. Treasury will now set up a commodities pricing council to meet with stakeholders to set prices for specified essential commodities. "It will be a very consultative process that will take into account the economic realities and the manufacturers views,"said Dr Kiome.
But manufacturers and the private sector have voiced their disapproval of the new law, terming it draconian and retrogressive. Patrick Obath, the chairman of the Kenya Private Sector Alliance, said the introduction of price controls goes against the promise of a free economy that has been in place for more than 20 years now. "Introduction of price controls led to retrogressive economic growth the world over," said Obath.
"In a free market economy, the law of supply and demand irons out the issue of cartels especially when there is competition." Obath said the law may result in shortages of essential commodities as manufacturers shy away from producing goods whose prices have been capped. Kenya Association of Manufacturers and other industry players have also voiced similar concerns.
KAM said that several companies may be forced to relocate to countries where the business environment is much friendlier.
Maina said with liberalised economies like America, there was strong consumer organisations that work to mitigate the effects of rising prices of basic commodities. "In our case, we need the government to stamp its authority and protect Kenyans from these exploitative individuals. We expect these sharp reactions to continue but the government must stand firm," he added.Last Edited: Tue 20th September 2011 at 07:34:06 AM