@the Deal; there is no VAT on food stuff in Kenya. In fact thesae are zero-rated, meaning that food processors claim the VAT paid for inputs like electricity.

@kadonye; yes, even petrol. I wrote a very comprehensive proposal to ERC on how to regulate (rather than control) the petroleum market.

This was around the same time that they proposed a pricing formula. My basic idea was to have price change date when all dealers are allowed to vary their prices. Once fixed, these should not be changed (either up or down) until the next changed date the following month. That way, if a station puts its price too high, it has to live with it for 30 days.

ERC are still thinking about it.

Once upon a time there was a man called Joe Donde the architect of the Donde Act.

The Donde Act provided that the maximum interest rate chargeable on all loans and advances from 1st January 2001 is
“the 91-day Treasury-Bill rate published by the Central Bank of Kenya on the last Friday of each month, or the latest published 91-day Treasury Bill rate, plus 4 per centum”.
It went further, by way of proviso, to provide that
“Provided that the maximum interest chargeable shall not exceed the principal sum, and that the section should only apply to loans and advances made or renewed after commencement of the Act’.

I will wait and see how far this one will go!!! However, IMHO this is a populist move though loaded with good intentions.

What you earn with your little holdings in KK and Total is measly compared to what you will save if this government regulates (not controls) the oil cartels.

And dont be scared of multinationals leaving, India has all local oil cos working under strict controls and they are all profitable. In fact,as a nation, India was a net importer of refined oil, but now due to good business, has become an exporter of refined. And I dont think think they have many/any oil wells there, so really they are not controlling the production.

How many siblings are they in the family? At some point the parents have to learn to have small families. The days of having 5-6-7-10-15 kids has gone. 2 kids shud be the norm...

BTW, aren't these the same farmers who want a MINIMUM price for their maize?

WE should look at South America and their experimentation on "pure capitalisitic" systems where regulation is nil. Conclusion massive economic failure of the economies and success of the multinational firms there. This is what we don't see because of our "ties" to exploitative KK, Total, Unga etc.

The case of petroleum and electricity deserve regulation. In any case monopoly in the former and cartels in the later are good enough reasons for regulation.

The only way price controls will work is if the government buys these commodities from the farmer at the market price and sell to the manufacturers at a subsidised cost. Say maize for example, if the market price for a bag maize is Kshs 1,000/-, the government can buy the maize at that price from the farmer and sell it to the millers at say Kshs 600/- or at the price the miller will be able to continue milling profitably. The miller can then be enforced to sell at a regulated price. Same thing for sugar! Problem here comes where mukiha was talking about how this will be enforced.

For fuel, it is more tricky. Keeping in mind that these marketers make a very small portion of the price we pay for fuel, again it is down to the government to reduce these 'taxes' they impose on the fuel. We know the prices of crude. The ordinary mwananchi running a petrol station will only sell at the price he/she will make reasonable profit. And that price is informed by the price they get from the marketers!

I believe price controls can work, but the problem is enforcement and the government's will to help the mwananchi. Seeing the way our government works, can we trust them to have our best interests at heart?

@KulaRaha, taxes are 50-60% of the cost of petroleum. There is only one outdated refinery that cannot refine cheaper crude and a dilapidated railway forces marketers to use tankers which are more expensive.
Point: Fix the infrastructure and distribution system and costs will come down.

@mukiha: The flaw in that 90s scheme was that anyone could buy from NCPB. What the govt can do is exclusively sell to licensed millers. The millers would not want to buy from third parties who are after a profit.

However, I agree with you on the need for market regulation rather than price controls. In addition to pumping money into NCPB, it (NCPB) would need to be run as efficiently as humanly possible! Tall order if you ask me!

What a load of CRAP... Screw being polite... At some point we have to tackle idiocy head on!

Which country in S.America experimented with "pure capitalisitic" (sic) systems?

The best managed economy is Chile which is also the 'freest' economy. Much better than Kenya.

How is KK, Total or Unga 'exploitative'? [There are multiple millers. Don't buy Unga products buy Mombasa Millers' products]

We need competition but I don't go to shady petrol stations like Hashi... but I have a choice. There is government subdsidized NOCK too...

Kibaki only did this because he was a wimp (still is,by the way) and followed everything 'Nyayo' said. I don't believe it was his call.
Kibaki (like any person with a hint of basic economics) knows the adverse effects of price controls.
Now he's the one calling the shots. He'll do what he wants and no one will tell him anything (as the swearing in at night shows)
And his 'buddies' won't let him sign this thing