Price control law enacted in Kenya

The Kenya Government will now have the powers to determine the price of essential commodities after President Kibaki (pictured), assented to a law that seeks to institute such controls.

Price controls were abandoned in the early 1990’s in favor of economic liberalization.

The Price Control Act provides for the regulation of prices of essential commodities in order to secure their availability at reasonable prices and for connected reasons.

The concerned Minister may from time to time, by order in the gazette, declare any goods to be essential commodities and determine the maximum prices of the commodities in consultation with industry players,” said a statement issued by the Presidential Press Service on Friday.

Essential commodities include: corn, corn flour, cooking oil, sugar, paraffin, diesel and gasoline.

Kibaki had previously refused to sign into law the Bill after it was passed by MPs arguing that by fixing the maximum prices of goods considered essential, Kenya would be going against agreements it has signed under the World Trade Organization. He also said such a move would be impossible to implement and spark an increase of unscrupulous traders.

He said the concerns would impose on Kenyans the same problems the Bill sought to avoid.

“Apart from going against the policy of liberalization, this clause also violates the fundamental principle of the World Trade Organisation Agreement on National Treatment, of which Kenya is a contracting party,” he argued.

The agreement by the WTO prevents member states such as Kenya from setting price controls that would hurt exporting countries that sell the same goods.

“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 further said.

He also disagreed with a provision in the Bill to fix maximum prices of goods and maximum service charges to be made for the goods.

Consumer prices in Kenya have rocketed this year. Inflation hit the 16.67 percent mark in August.