Price Control Bill rankles Kenyan manufacturers

[jua]

As the debate over the Price Control Bill rages on, a section of manufacturers have petitioned President Kibaki not to sign it into law.

Kenya Association of Manufacturers (KAM) say the Bill will stifle business, and scare away investors if it becomes law.

The manufacturers insist the Government has other alternatives that it could use to control prices, rather than resort to another law.

"Kenya has a law on competition in place that could be used to address the problem of high prices instead of putting into place a new law that conflicts with the ones already in existence," Dickson Poloji, a Senior Executive Officer Policy and Research at KAM said during a public forum organised by the Institute of Economic Affairs (IEA) yesterday at a Nairobi hotel.

He reckons that the Government should first reduce the impediments to production before imposing price controls.

Not accent

"President Kibaki should not accent to this Bill as Parliament must first amend other laws that allow for the liberalisation of the market," he said.

KAM argues that suppression of prices for millers and manufacturers will see a drop in prices paid to cereal farmers and traders.

"With full fledged Customs Union and Common Market already in place, Kenya could lose out if legislation continues to stifle business," Poloji explained.

The Price Control Bill provides for mandatory control of prices for staple foods in Kenya, notably maize, wheat, sugar, rice and cooking oil.

However, it leaves out essential products and services such as dairy products, house rent or transport, which the manufacturers say is likely to benefit the urban dwellers who are net food importers from the rural Kenya.

Controlling products

"Maize, wheat and sugar are predominantly grown in Western Kenya and Rift valley. What is the implication of controlling products emanating from one part of the country and consumed elsewhere?" Poloji asks.

The manufacturers point out that the Government will lower food prices more if it reduced tariffs on grain imports.

They argue that since the country cannot feed itself from local produced grains alone, and had to import grains to meet the shortfall, the best way to reduce the price of food is to reduce the import duty on grains.

"Our policies make it expensive to buy imported grain because of high tariffs. This is what we should be addressing and not price controls," said the KAM official.

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