A bill has been tabled in parliament seeking to empower the Cabinet Secretary of Treasury to set maximum and minimum price limits for essential foodstuffs and pharmaceutical products, in order to make them more affordable for low-income households.
- The Price Control (Essential Goods) (Amendment) Bill 2024 has highlighted that the CS Treasury can declare through a gazette notice price caps for maize, wheat, rice, cooking fat, sugar, and pharmaceutical drugs within contingent periods to pacify the cost of living for ordinary citizens.
- The Ministry will set a Price Control Unit that will assess producers’ compliance to the set price limits, and it would be headed by the Director of Price Control.
- The Price Control Unit will also collaborate with other government agencies to enforce the policy, as well as advising the Cabinet Secretary on the cost and market considerations for elaborate pricing.
“The objective of this act is to stabilize prices of essential goods in order to ensure that the cost of living remains manageable for the public and to prevent sudden variations in the price of essential goods,” a section of the bill states.
The price control also seeks to tame monopolies from exploiting scarcity to broaden profit margins. By restraining the prices of goods and the considered essential, the ministry intends to tether inflation.
In the latest KNBS survey detailing July inflation figures, prices of cooking gas, cooking oil, and cabbages went up despite overall inflation easing by 4.3%. The prices of other commodities like tomatoes, onion-leeks, wheat and maize flour fell.
The aftermath of the recent protests, which conveyed concerns about the high cost of living, has possibly prompted the drafting of this amendment bill.
Raging Concerns
In free market economies like Kenya, price controls are a subject of debate. Although their intention is noble, their implementation and after-effects are notably skewed.
It has been argued that governments setting price caps or floors, rather than allowing demand and supply to dictate prices, leads to commodity scarcity, depreciation in product quality, and opportunities for corruption and black markets. Moreover, they can easily be used for political expediency.
While prices are regarded by ordinary citizens as merely pursuits for profit, global economic winds and rising local costs such as macroeconomic policy decisions and rising taxes, inform price hikes. Attempting to infringe producers’ rights to set prices could distort markets of essential goods leading to exacerbated woes.
In Kenya, the Price Controls Act was signed In 2011 by President Mwai Kibaki but it was mainly reserved for fuel. In 2017, Treasury imposed caps on the price of maize flour to stem a further upswing. The result was a prevalent scarcity and cutthroat competition amongst consumers to access available stock.
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