The Kenyan government is poised to gain significant control over the pricing of essential goods with the introduction of the Price Control (Essential Goods) (Amendment) Bill, 2024. This legislation aims to stabilize prices and shield Kenyans from market exploitation. If passed, the government will have the authority to determine retail and wholesale prices for key commodities.
Key Commodities Under Regulation
The Bill outlines several essential commodities whose prices will be regulated, including maize, maize flour, wheat, wheat flour, rice, cooking fat or oil, sugar, and specific pharmaceutical drugs. This move is designed to ensure these crucial items remain accessible and affordable for all Kenyans, particularly low-income earners.
Objectives and Rationale
The primary goal of the proposed amendment is to amend the Price Control (Essential Goods) Act, 2011. The Bill emphasizes the necessity of regulating prices to make essential commodities available at reasonable prices, thereby protecting the public from exorbitant costs. According to the Bill, “This Bill seeks to amend the Price Control (Essential Goods) Act, 2011 to regulate the prices of essential commodities in order to secure their availability at reasonable prices for all Kenyans, especially the low-income earners.”
Nominated Senator Tabitha Mutinda, who sponsored the Bill, introduced it to the Senate for the First Reading. Mutinda argued that enacting this law would prevent essential goods and services from becoming unaffordable to the public and stabilize prices to keep the cost of living manageable.
Implementation and Scope
The Bill stipulates that the Cabinet Secretary (CS) of the National Treasury will be responsible for setting the minimum and maximum retail and wholesale prices for essential goods. This will be done through orders published in the Gazette. Moreover, the CS can periodically declare additional goods as essential commodities and set their prices in consultation with industry stakeholders.
Economic Concerns and Criticism
Despite its intentions, the Bill has faced criticism from economists who argue that it could harm the economy. Former Mandera Senator Billow Kerrow voiced his concerns, stating, “Price Controls! Back to 1992 KANU days. If this Bill goes through, it will end economic liberalisation and free market economy. It will also usher in the attendant rent-seeking and corruption in the corridors of power, big time. More significantly, it will kill investment and our competitiveness in the region. Completely misplaced.”
Critics argue that price controls can lead to unintended economic consequences, such as rent-seeking behavior, corruption, and reduced competitiveness. They fear that such regulations might stifle investment and hinder the free market’s natural ability to balance supply and demand.
Safeguards and Considerations
The Bill includes provisions to mitigate potential negative impacts. In setting prices, the CS must consider minimal restrictions on competition, normal market conditions, and severe market disturbances that justify price fluctuations. Additionally, the CS must evaluate the significance of essential goods in economic development and consumer purchasing power.
Ensuring Consumer Protection
The Bill also aims to protect consumers from unscrupulous business practices. It seeks to prevent sudden price variations that could erode purchasing power and overall consumer welfare. By curbing the influence of monopolies and oligopolies, the Bill intends to prevent dominant market players from artificially inflating prices and exploiting consumers.
Conclusion
The Price Control (Essential Goods) (Amendment) Bill, 2024, represents a significant shift in Kenya’s approach to managing essential goods’ prices. While it aims to protect consumers and stabilize the market, it has sparked a debate on the potential economic implications. The outcome of this legislative proposal will be closely watched as it progresses through the Senate and into potential law.
