Kenya backtracks on price controls
Sep 05, 2010
UGANDAN exporters can sigh with relief after President Mwai Kibaki rejected the controversial Price Controls Bill, which would have given the Kenyan Treasury powers to fix prices of primary consumer commodities.
By Emojong Osere
UGANDAN exporters can sigh with relief after President Mwai Kibaki rejected the controversial Price Controls Bill, which would have given the Kenyan Treasury powers to fix prices of primary consumer commodities.
The introduction of The Price Controls (Essential Goods) Bill, 2009 faced criticism from the regional business community who argued that it was against the East African Community common market protocol, which allows the bloc free cross-border trade.
Kibaki returned the Bill passed in June to the House for amendments.
“This obligation places a duty on Kenya to avoid measures including price controls, which would have prejudicial effects on other contracting parties supplying imported products to Kenya,†the President said in a statement to Parliament on Thursday, adding that the proposed legislation in its present state may lead to the rise of unscrupulous businessmen.
The Kenyan Parliament had endorsed the Bill, authorising the Finance Minister to fix prices of petrol and diesel, maize, maize flour, sugar, rice, wheat, wheat flour, kerosene and cooking fat. Uganda, Kenya’s main trade partner, exports the listed agricultural products.
It would mean exporting the listed essentials to Kenya would be challenging for Ugandan firms and individuals because they would have to sell at government-legislated prices.
Kenyan MPs will have to revise the new law to address Kibaki’s proposals or quash it.
“Going back to price control mechanisms in today’s liberalised economic environment is impractical,†David Mangeni, the Busia Millers managing director, said.
“It would bring shortages as a result of hoarding of basic commodities leading to higher prices.â€
The Bill out-rightly criminalises buying or selling of the listed goods at a price over and above the maximum price fixed by the government.
It also sought to introduce a five-year jail term or a fine of Ksh1m (about sh27m) for traders found breaching the legislation.
UGANDAN exporters can sigh with relief after President Mwai Kibaki rejected the controversial Price Controls Bill, which would have given the Kenyan Treasury powers to fix prices of primary consumer commodities.
The introduction of The Price Controls (Essential Goods) Bill, 2009 faced criticism from the regional business community who argued that it was against the East African Community common market protocol, which allows the bloc free cross-border trade.
Kibaki returned the Bill passed in June to the House for amendments.
“This obligation places a duty on Kenya to avoid measures including price controls, which would have prejudicial effects on other contracting parties supplying imported products to Kenya,†the President said in a statement to Parliament on Thursday, adding that the proposed legislation in its present state may lead to the rise of unscrupulous businessmen.
The Kenyan Parliament had endorsed the Bill, authorising the Finance Minister to fix prices of petrol and diesel, maize, maize flour, sugar, rice, wheat, wheat flour, kerosene and cooking fat. Uganda, Kenya’s main trade partner, exports the listed agricultural products.
It would mean exporting the listed essentials to Kenya would be challenging for Ugandan firms and individuals because they would have to sell at government-legislated prices.
Kenyan MPs will have to revise the new law to address Kibaki’s proposals or quash it.
“Going back to price control mechanisms in today’s liberalised economic environment is impractical,†David Mangeni, the Busia Millers managing director, said.
“It would bring shortages as a result of hoarding of basic commodities leading to higher prices.â€
The Bill out-rightly criminalises buying or selling of the listed goods at a price over and above the maximum price fixed by the government.
It also sought to introduce a five-year jail term or a fine of Ksh1m (about sh27m) for traders found breaching the legislation.