For more than two years the country has been experiencing constantly escalating prices of essential commodities, which clocked historic high levels by april that exploded into public protests and the emergence of the price control law.

The escalation has continued to worsen despite the government’s efforts to try and control the galloping state of affairs by introducing subsidies and tax waivers, particularly on some food and petroleum products without achieving results.

According to the Kenya Bureau of Statistics  at the end of last month, the prices of food and petroleum products since last year have increased by between 50 and 100 per cent and are continuing to increase without restraint though showing some signs of stabilization.

This state of affairs is consigned to worse degeneration by the continued weakening of the Kenya Shilling against the international hard currencies, the unstable prices of petroleum products, spiraling inflation, bad weather conditions - adversely affecting food production and above all deliberate hoarding of essential commodities by traders and middlemen cartels.

The Price Control (Essential Commodities) 2011 Act assented to by President Mwai Kibaki this month (September) provides for the regulation of prices of essential commodities in order to secure their availability at reasonable prices and for connected reasons.

A statement from the Presidential Press Services declared: “Under this Act, 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."

The passing of the law has predictably provoked angry reactions and protests from manufacturers and the trading community up in arms against the move which was initiated by parliament. This has set the stage for questions on whether the law is going to be effectively implemented already with reports permeating the air that the business cartels are plotting to hoard essential commodities to push their prices up to defeat the purpose of the new law.

Whereas a huge majority of Kenyans including politicians are welcoming and  lauding the assenting of the law by the president - these challenges should be expected considering the current volatile status of the economy, an ever depreciating shilling, soaring inflation at over 16 per cent in August as well as other factors.

The genesis of the introduction of the price controls legislation in the country dates back to before the year 2007 when Mathira constituency legislator Ephraim Maina crafted the initial Bill due to persistent price hikes of essential commodities prices that eventually saw the Bill passed last year despite the fact that the new law unlike the previous Bill provides a huge window of consultation with stakeholders by the finance minister before effecting any controls.

When parliament passed the Price Controls (Essential Commodities) 2010 Bill the president declined to accent onto into it citing a good number of reasons why, a situation that eventually saw parliament emend contentious areas that the head of state had pointed out that saw the birth of the new law.

At that time the president argued: “That fixing the maximum prices of good considered essential in the country’s economy, Kenya would be going against agreements it had signed under the auspices of the World Trade Organization adding that the move would be impossible to implement and explode the eruption of unscrupulous traders to profi teer on the situation.”

President Kibaki further argued at that time that the concerns raised would impose on the Kenyans the same problems the same Bill was trying to neutralize saying that: “Aside from going against the general liberalization policies, it violated the basic principles of WTO agreements on national treatment that Kenya is a contracting party to.”

The other issues that the head of state was opposed to were provisions in the Bill that allowed the fixing of maximum goods as well as service charges on goods adding that it would have been tough to enforce them that could have easily have provoked the eruption of opportunistic unscrupulous traders. It also equally provoked angry reactions from traders and manufacturers.

His reversal on the matter this time round according to the PPS: “The President signed into law legislation that will regulate the prices of essential commodities to protect consumers against exorbitant prices charged by unscrupulous traders.”

Indeed since the beginning of the year when sugar and maize floor started escalating to an all time high of more than Kshs. 100 per kg of sugar and Kshs. 150 per a 2kg of maize flour, a situation that has not improved to date the government blamed speculative traders of hoarding the commodities with the latest reports that they were making as much as 300 per cent in profits on the targeted essential commodities.

In the emerging scenario with the new law, the stage is set for the Government to control the prices of essential goods such as maize flour, wheat, rice, sugar, paraffin, diesel, cooking oil and petrol virtually all of which are victims of the continued price hikes.

The Kenya Private Sector Alliance (KEPSA) and the Kenya Association for Manufacturers (KAM) are charging that the president’s and parliaments move to establish this legislation is in contravention of the provisions of the free market economy and the new constitution as well as a fall back to the old ways of a controlled economy before the advent of economic liberalization in the 1990s.

However, the architect of the Law, Mr. Maina argues: “It is the government’s principal responsibility to ensure that the basic essential commodities are readily available to the citizenry at affordable consumer prices and not dictated by the whims of unscrupulous profiteers.”

He says that unlike the original Bill, that assented to by the President provides room for consultation between the finance minister and strakeholders before determining what the essential commodities are that should be subjected price controls and the maximum prices agreed upon between the parties concerned to ensure that consumers, manufacturers and traders are satisfied and none is hurt by the agreed upon maximum pricing.

The legislator like many of his colleagues in parliament and the cabinet saythe country’s economy is just a market that is saturated with profiteering cartels as  opposed to the competitive free market economy as is being propagated by the manufacturers and the general business community.

Some of the critical areas in the country’s economy which have been cited to have been infiltrated, taken over and controlled by these cartels include the food, sugar, financial services, the fuel, utility sector among other key areas in the economy.

Chairman of the manufacturers association, Jaswinder Bedi says that KAM has always advocated for free market enterprise that could give consumers competitive prices arguing that price controls is not the solution to the high cost of living bedeviling the country.

Mr. Singh says that the association will always pressurize for a free competitive market economy because it is the only way consumers can be assured of getting the best prices since controlled prices will not be the best for consumers because of the same controls.

Under the new law, the minister of finance will be expected to consult with the business industry in fixing prices as well as ensure such a move considers the relevant treaty or convention ratified by Kenya. He is authorised from time to time, by the Kenya Gazette order, to declare any goods to be essential commodities and determine the maximum prices of the commodities in consultation with industry players.

The government has of late come under pressure to cushion consumers from arbitrary changes in prices of basic commodities, coming against the backdrop of a sharp rise in the cost of living, especially for the low-income segments of the population.

Sharp rise in the prices of basic commodities such as sugar, maize flour and petroleum pushed inflation up for 10 months in a row to settle at 16.67 per cent in August.