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| Kenya warning over price fixing | Kenya warning over price fixing |
| (about 2 hours later) | |
| A severe drought drove up the price of basic commodities last year | A severe drought drove up the price of basic commodities last year |
| Kenyan businesses have warned that new price-fixing legislation will cause job losses and food shortages. | Kenyan businesses have warned that new price-fixing legislation will cause job losses and food shortages. |
| MPs passed the bill on Wednesday giving powers to the finance minister to set maximum prices for basic goods like maize and fuel following price hikes after last year's drought. | MPs passed the bill on Wednesday giving powers to the finance minister to set maximum prices for basic goods like maize and fuel following price hikes after last year's drought. |
| It is a move away from the free market approach which Kenya has followed for the last 20 years. | It is a move away from the free market approach which Kenya has followed for the last 20 years. |
| The president will have three weeks to decide whether to approve the bill. | The president will have three weeks to decide whether to approve the bill. |
| Five-year jail term | Five-year jail term |
| The BBC's Peter Greste in the capital, Nairobi, says when a severe drought drove up the price of basic commodities like flour, sugar and fuel across the country last year, the government came under intense pressure to stem inflation. | The BBC's Peter Greste in the capital, Nairobi, says when a severe drought drove up the price of basic commodities like flour, sugar and fuel across the country last year, the government came under intense pressure to stem inflation. |
| But parliament's solution has been condemned by industry and economists alike, our reporter says. | But parliament's solution has been condemned by industry and economists alike, our reporter says. |
| With the end of the drought, inflation has settled to a respectable 3.9%, he says. | With the end of the drought, inflation has settled to a respectable 3.9%, he says. |
| Analysts like Samuel Nyamdemo from the University of Nairobi's School of Economics say price fixing will only create long-term problems. | Analysts like Samuel Nyamdemo from the University of Nairobi's School of Economics say price fixing will only create long-term problems. |
| He argues that it will force the government to control prices of farm inputs like seed and fertiliser as well, and encourage farmers to move away from those artificially cheap commodities, creating serious shortages. | He argues that it will force the government to control prices of farm inputs like seed and fertiliser as well, and encourage farmers to move away from those artificially cheap commodities, creating serious shortages. |
| Manufacturers too say it will encourage factories to move elsewhere, just as Kenya is about to enter the East African Economic Community. | Manufacturers too say it will encourage factories to move elsewhere, just as Kenya is about to enter the East African Economic Community. |
| "We are going back to the era of shortages or commodity diversion," Kenya Association of Manufacturers' chairman Vimal Shah told Kenya's Daily Nation paper. | "We are going back to the era of shortages or commodity diversion," Kenya Association of Manufacturers' chairman Vimal Shah told Kenya's Daily Nation paper. |
| "If a manufacturer finds the cost of inputs too high, he will simply close shop until they come down or sell his products to countries which have no price controls," he said. | "If a manufacturer finds the cost of inputs too high, he will simply close shop until they come down or sell his products to countries which have no price controls," he said. |
| But Kenya's President Mwai Kibaki is himself an economist and may return the bill, which has penalties of up to five years in jail for anyone breaking the rules, to parliament. | But Kenya's President Mwai Kibaki is himself an economist and may return the bill, which has penalties of up to five years in jail for anyone breaking the rules, to parliament. |
| Given that Kenya is pushing for trade liberalisation at the World Trade Organisation talks, sending the bill back looks likely, our reporter says. | Given that Kenya is pushing for trade liberalisation at the World Trade Organisation talks, sending the bill back looks likely, our reporter says. |
| Should prices be determined by government? Send us your views using the postform below. | Should prices be determined by government? Send us your views using the postform below. |
| Kenya is on the right track. Talk about 20 years ago. Life was so good in Kenya. Life was affordable. Prices have been hiking up while salaries stay the same therefore making the cost of living so very high. the rich are getting richer and the poor are getting poorer. Please regulate the prices. It will be good for the people but the businesses wont like it because they wont take advantage of the system. Good job mps. support this bill. it's worth it. free market is not that good for developing countries. | |
| Jill, Kenya | |
| It's about time for the goverment to regulate prices for food and fuel. The businesses have exploited and taken advantage of the prices. How come food is so expensive in kenya and fuel? We are an agricultural country. Food should not be that expensive. The businesses are making so much profit while the commoner cannot even afford to eat the basic human need. Please MP push that bill. Let those who want to do businesses do with the regulation. If you don't want then go to another country and invest. | |
| Melody, Kenya | |
| Price controls do come with a negative connotation of course. However the converse side is the cost of living is very high in Kenya and especially so in Nairobi. Prices of basic commodities go up but never come down - especially fuel which affects the price of everything else - however in other markets the price of fuel oscillates here it just increases why? The government needs to implement price controls because there are no regulations for controlling the market place shielding the consumer. Manufacturers here do make healthy profits in the region of 30% plus after tax - at the same time they pay minimum wage to their line employees who live in slums - these are the same monopolies that effectively control the market preventing new entrants who would increase competition creating a fair market. So yes there is a problem - price controls won't make it go away, it should be part of a larger regulation mechanism which is completely lacking. Something needs to be done. | |
| P Kilonzo, Nairobi | |
| This has always been the way in the past, Tanzania, Zambia, Zimbabwe, Nigeria etc. leading to smuggling, corruption, destruction of local processing industries and in the end food riots and aid dependance. Just politicians knee jerking again. | |
| Tim Havard, Largoward Fife | |
| Yes, Kenya should control prices of essential commodities. Contrary to what champions of neoliberalism would like us to believe there is nothing inherently wrong with such an approach. Even here in the United States - reputedly the home of unmitigated free-market economics - the government fixes prices of certain essential commodities, key among them milk and eggs. | |
| Benson Musila, Pittsburgh | |
| Should prices be determined by government? Send us your views using the postform below. |