Neighbourhood Kenya 20th Edition - Kara

ECONOMY
Cartels reap
from miseries
of poor Kenyans
In August 2011, Kenya was
suddenly hit by an acute sugar
shortage. Then, a 2kg packet
was retailing at between Sh195
and Sh200 supermarkets. A few
packets of sugar were, however, available
on the shelves but with a caveat: ‘don’t
pick more than one packet’. The price had,
however, doubled to Sh400.
Stakeholders in the industry and
government offi cials quickly blamed the
shortage on the refurbishment of a major
plant in the country and promised that
supply would be restored within no time.
True to their word, constant supply was
restored -but the prices still remained high.
This epitomizes the vulnerability of
Kenya’s economy to manipulation by
profi teering businessmen who work as
a cartel with the blessings of corrupt
government offi cials.
Unfortunately for poor wananchi, the
cartels have fi rm grip on all key sub-sectors
including oil, sugar, maize and transport.
They dictate prices in a bid to make a killing.
As a result, a helpless -perhaps
unwilling- government has resorted to
desperate measures of fi xing prices in order
to quell disquiet among an overburdened
populace.
In September last year, Mathira MP
Ephraim Maina sponsored a Bill, Price
Control Bill (Essential Goods), in parliament
to give powers to Finance minister to set
prices for essential commodities.
Defending his Bill, which is now an Act,
Maina said it would deal with cartels in the
food industry, which have been charging
exorbitant prices for their commodities.
Maina argues that Kenyan economy is
a market full of cartels rather than a free
market economy. The legislator cited cartels
in the fi nancial, food, fuel and utility sectors,
saying these people collude to fl eece
consumers.
Gwassi MP John Mbadi, also says
the fair competition notion in Kenya has
been replaced with cartelism extorting and
exploiting Kenyans.
“Look at the petroleum industry, it is
just a cartel profiting at the expense of
Kenyans to the extent that we have even
had a company like Kenya Power making
huge profi ts at the expense of the economy.
This is not a free economy. It is an economy
that is being controlled by cartels and the
government has been doing very little,”
charged Mbadi.
His sentiments were echoed by Defence
assistant minister David Musila, who
said the idea of removing price controls
was good but experience had shown that
creating a free economy had not worked.
“We have managed to create billionaires
at the expense of ordinary Kenyans. We
have suffered at the expense of cartels.
We have seen people hoarding sugar
and importing it in order to benefi t from
wananchi,” said Musila.
In 2010, the government also started to
set maximum fuel prices through the Energy
Regulatory Commission.
This move was prompted by public
condemnation of the oil marketers after
studies confi rmed they were operating as
cartels.
However, ERC has been unable to
rein in cartelism in the oil industry. Just
last month, a severe fuel shortage hit
Kenya when the commission reduced fuel
prices with profiteering oil marketers being
accused of hoarding the all-important
commodity to force a review in prices.
However, the marketers explained that
16.