The government will be able to set a fixed price for all essential goods regardless of market conditions, location or any other factors if a new bill is passed into law.
The Price Control (Essential Good) (Amendment) Bill, 2024, will give the Treasury Cabinet Secretary powers to set the maximum and minimum prices of all essential goods which include maize, maize flour, wheat, wheat flour, rice, cooking fat or oil, sugar and prescribed pharmaceutical drugs.
The rationale of the bill is to cushion the low-income earning Kenyans from high prices by stabilising the cost. The bill will also prevent sudden variations in the prices of essential goods that often lead to a decrease in purchasing power from the public.
The sponsor of the bill, Nominated Senator Tabitha Mutinda adds that the bill will guarantee access to essential goods during times of crisis such as natural disasters, public health emergencies and also prevent monopolies from markets which exploit Kenyans by inflating the prices.
“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. The enactment of this law will also ensure that Kenyans are protected from exploitative and unscrupulous businesspersons,” the bill reads in part.
Additionally, the bill will give the Treasury CS powers to declare any good to be an essential commodity and can also set the category of person to whom the fixed prices will apply. The CS will also determine the period of time in which the uniform prices will apply.
According to the bill, the CS is required to consult all stakeholders including farmers, manufacturers and retailers before setting the prices.
How the CS will set the prices
The CS will consider seven factors before setting the prices. These include normal market conditions, significance of the essential goods in the market, whether the new prices will strengthen competitiveness in the local market, environmental and health requirements in the production and use of the goods, the public’s current purchasing power and whether there are options for purchasing the said items.
Also, the CS is required to consider whether the new prices will affect the business from operating competitively in the marketplace.
How the government will enforce compliance
The CS will appoint a Price Control Unit that will be under his Ministry and will be responsible for monitoring and enforcing the new prices.
The unit shall be headed by a Director of Price Control and will also be required to collaborate with existing agencies to prevent market manipulation and make recommendations to the government based on analysis of market trends, consumer needs and impact of price controls.
The Unit will also educate the public about the price control policies, their importance and implications on their businesses. They will also prepare quarterly reports which show the effectiveness of the new prices and how adjustments can be made to improve the economy.
With the government setting prices, critics, however, argue that this would lead to several implications such as reduced quality as producers may cut costs to maintain profits. This could also discourage investment in the production of essential goods if the businesses cannot cover their costs.
Fixed prices that don’t reflect the market demands or cost could also hinder the farmers and manufacturers from improving their products. This means that the government would need to find a balancing act that would balance the benefits of price control while at the same time preventing market distortions.
