A bill has currently been passed allowing for regulation of prices of goods commonly used by wananchi specifically price of Maize flour and Fuel. Price regulation means controlling the amount of money being paid on the said commodities in order to safe guard the common man against the ever-rising prices. This move has effects in whichever economy and the effects can be good or bad depending on the stability of the economy in topic, how it is carried out and the business atmosphere.
Literally from the wananchi point of view, we are game. It’s a high time someone started paying attention to our predicaments. But the main area where the bill has some real repercussions on is the small and medium businesses especially in economy like ours and the so called repercussions will for sure trickle down to the common man and in a huge way.
The question is, is economy like ours ready for regulation? In my opinion, NO.
This is the kind of bill you talk about… leave alone table it in parliament, after the government has ensured that the trading environment is calm and the cost of production is fair for businesses.
Seems like the government is trying to take a shortcut in settling the anxiety being felt by Kenyans about the food price going higher and higher each day but the truth is at 46 years of age, Kenya can do better than cooling down anxieties and make a real move that will see our economy becoming stable hence accommodating and encouraging new businesses and investments in the country.
Kenyan cost of production is currently one of the highest globally. This means that manufactures in Kenya is finding it rough to compete with manufactures from other countries due to variations on cost of doing business. The best example would be energy where electricity alone constitutes to around 40% of total manufacturing cost. While a Kenyan manufacturer will pay between 10 and Ksh 15 per Kilowat of electricity, their competitors in Asia will pay between Ksh 2.50 and Ksh 4. If you were a manufacturer in Asia, you would already have at least one reason to start negotiating with your government on price control.
The other contributing factor is the infrastructure. Talk about the transport system, there are basically no roads and the few that are there are full to capacity and the amount of time lost on traffic is costing the businesses so much. It will help if the we could move from point A to B in less time and with ease to as to have enough time to think about how we can improve the businesses. Better still, good roads will also save the amount of money spent on Fuel and as a result we can spare some cash to allow for easy expansion of businesses.
Without proper planning even if price regulation was justified, it will still not work. Kenya is known for doing too little too late or not doing anything at all when needed. Last year people were dying of hunger and this year thank God this year we are blessed but it appears the government are not prepared to store the maize and again we hear news about toxic maize killing people. You want to call this bad lack, I don’t think so, I believe no one was prepared to buy maize from the farmer leave alone store them. Again last year we had power shortage due to lack of rain and this year, water is killing people. You would think someone could be interested in collecting the water but no, the expansion of Masinga dam is just starting and am thinking, why dint someone think of that before April because as usual rains are expected from April and it does kill people every year.
It will be interesting to see how the ‘price regulation’ is going to be exercised now that there are no longer boundary between East African markets. I think this bill must be thrown out otherwise Kenyans will suffer as there’s likely to be diversion of goods. Unless this law is enforced on all the countries in East Africa it is irrelevant otherwise if traders find the cost of input so high in Kenya they will close down and go trade in the other East African countries with no price control after all, it is legal.
I think it’s too premature for Kenya to put such kind of policies in place….