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SHOULD GOVERNMENT CONTROL FOOD AND FUEL PRICES..???

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Denzel Musumba

Denzel Musumba

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Kenya's Parliament on Wednesday passed a Bill requiring Treasury to fix the price of food and petrol. Parliament wants the prices of maize, maize flour, sugar, rice, wheat, wheat flour, kerosene, diesel, petrol, and cooking fat controlled by the government. The Bill is not law yet, it still needs President Kibaki’s signature. If it becomes law and is implemented, the Bill will almost certainly bring down the price of the commodities in question. But it will only be temporary relief and shortages are likely to follow as producers move away to crops with better returns. On Wednesday, manufacturers warned that the move will kill industries and reverse gains made in liberalising the economy, a key plank in the vision to transform Kenya into a newly industrialised country by 2030. Though likely to be popular with wananchi (citizens), feeling the pinch of high prices, manufacturers warned that price controls may result in the closure of many factories, leading to job losses. The vote by MPs seeks to return the country to a practice last seen in 1994 when the government completely freed the market economy. If controls are re-imposed, then they might need to be wider that those envisaged in the Bill because the government will need to control the prices that manufacturers pay for their inputs, to ensure they stay in business. The Price Controls (Essential Goods) Bill, 2009 was sponsored by Mathira MP Ephraim Maina. It will now go to the Attorney-General, who will send it to the President within 14 days. The President will have three weeks to assent to the Bill or reject it and send it back to the House for amendment. The Bill gives powers to the Finance minister to fix the maximum retail and wholesale prices for essential commodities. It criminalises buying or selling the listed goods at a price which exceeds the maximum price fixed by the government. Breaking that rule will lead to imprisonment for five years or to a fine of Sh1 million, or both.

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