Mwaniki Wahome
6 June 2011
Nairobi — A policy think tank says that the proposed price control Bill is not the panacea to the problems facing consumers. It said that if implemented the result will be scarcity of some products.
The Kenya Institute for Public Policy Research and Analysis said experience from elsewhere shows price controls mostly led to scarcity of goods.
“What they do (manufacturers) is quickly shift to production of more profitable products,” said the executive director Moses Ikiara.
Briefing the media during a workshop on regulation and consumer protection, Mr Ikiara said such regulations have to be well thought-out because the regulator setting the ceiling does not have perfect information.
“They are likely to place it at a level that discourages producers or level that is not optimal to consumers. As country, we should avoid price controls. What we need to ensure is that market conditions enhance competition” he said on Monday.
Mr Ikiara said the mobile telephony market was an example of a sector where competition had worked well for consumers, with the prices dropping, quality of services improving and innovations being undertaken.
“What we need to be asking ourselves is what is working in the mobile telephony market that is not working in the maize and oil market,” he said.
Alleviate problems
Mr Ikiara said in the short term, the government should make interventions through subsidies to alleviate the problems of the poor.
He said the zero-rating of diesel and kerosene would help the poor, particularly those in the agricultural sector where over 70 per cent of the population is found.
Mathira MP Mr Ephraim Maina has been agitating for price controls on essential goods to cushion the poor from escalating cost of living.
President Kibaki, however, declined to sign it into law. Mr Maina has indicated that he will re-introduce it to the house for debate with amendments.
AllAfrica – All the Time