Raila told to walk the talk over rising prices

By Kenfrey KiberengeKenyans have been left with a feeling of dÈj‡ vu after Prime Minister Raila Odinga’s delayed promise of scrapping all kerosene taxes and import duty on maize and wheat last month.
During the Prime Minister’s Time in Parliament last month, Raila promised that the Government would remove all taxes and levies on kerosene to reduce the cost of light and cooking energy.
The Premier further promised the Government would scrap import duty on wheat and maize imported by private millers to reduce the cost of flour.
"Appropriate legislation will be introduced in this House as soon as possible to give effect to this measure. I expect that this House will act with utmost urgency, so that Kenyans receive this much needed relief very soon," said the PM.
Skyrocketing prices
But more than two weeks later, nothing has been heard of the planed law. Fuel and food prices have remained on a steady increase, which is epitomised by a 2kg packet of maize flour hitting the Sh100 mark from Sh87 late last month.
And yesterday, the Energy Regulatory Commission announced higher fuel prices where super is set to go up by Sh4.2, diesel Sh2.6 and kerosene Sh3.9 in Nairobi, starting today.
The situation could get worse with millers warning on Friday of a major maize shortage in the country.
The Government attracted similar bashing in 2008 when the price of maize flour rose to Sh120.
The Government then hatched a plan to ‘save the situation’. The plan, where a 2kg packet of maize flour sold at Sh52 to the poor and Sh72 to the rich, however, came tumbling down due complexity in its implementation.
Under the Government plan, kerosene price would have gone down by Sh5.66 per litre, in addition to the reduction of Sh2 per litre announced by the Treasury early April, resulting in a total reduction of Sh7.66 per litre.
Raila’s statement avoided a showdown between wananchi and the State over the runaway food and fuel prices, which has pushed the cost of living to astounding levels.
Consumers Federation of Kenya (Cofek) quickly suspended all planned mass protests, terming Raila’s announcement as a "gesture of good faith from the Government".
But Cofek’s Secretary General Stephen Mutoro now says Kenyans were conned into silence.
"When the pressure subsided, they forgot about it. The PM has not gone back to Parliament since then," says Mutoro.
But in a swift rejoinder, the PM’s office maintained that the process of scrapping the taxes on kerosene was still underway.
"The process of bringing legislation in Parliament is not that simple. The PM can’t wake up one day and do it; a Cabinet memo has to be passed," explained PM’s spokesman Dennis Onyango.
He said the memo had already been prepared and was waiting Cabinet’s approval. "We hope the Cabinet will be convened soon and it will sail through," he said.
Regarding the latest price increases, the current World Bank Food Price Watch calls for immediate actions such as assistance and nutritional programmes to the poorest areas where food prices have spiked.
But analysts have poked holes on the commitment of the Government to stem the prices as well as the viability of its policies.
Last month, Treasury announced 30 per cent and 20 per cent tax cuts on kerosene and diesel, but that did not impact on the prices, which were supposed to drop by a meagre Sh2 –– though this is yet to be effected.
Activist Okiya Omtata argues that though the tax cut is welcome, the runaway cost of living, whose cause he said was broader, would not change much.
"The problem we have here is corruption. We know very senior people in the Government are in charge of the cartels who have been influencing fuel prices in the country," says Omtata.
Mwalimu Mati of Mars Group argues that policy coherence is difficult with over 40 ministries.
"They need to reshuffle the Cabinet including the Permanent Secretaries because leaner governments tend to be more transparent," he says.
Ripple effectKennedy Masime of Centre for Governance and Development said market forces should be left to determine the prices.
"Cushion the most vulnerable through tax and subsidy, that is, removal of tax on kerosene, for instance, is a move in the right direction, but it is not enough because it forms a small percentage of poor households’ expenditure," argues Masime.
Neto Agostinho, the national convener of Kenyans for Justice and Development echoed these sentiments saying the Cabinet should be trimmed to 15 ministries.
"Because of their collective mismanagement of the country, inflation, poverty, unemployment, the gap between the rich and poor, corruption, tribalism, impunity, insecurity and the cost of living is growing," says Agostinho. Mati blames poor Government policies on "a lot of bureaucrats who have passed the sell-by date".
"This constant passing of burden to consumers will break our backs and people will soon revolt," says Mati.
The WB report says the increase in food prices has led to a deepening of poverty for many of the 1.2 billion people who were already living below the extreme poverty line of 1.25 dollars a day and who spend a large share of their incomes on food.
"Simulations show that an additional ten million people would fall below the extreme poverty line; a 30 per cent increase is estimated to lead to 34 million additional poor," says the report.
WB further warns that the poor have a lower ability to cope with such shocks and resort to eating less and consuming poorer diets, which have long-term nutritional consequences.
"Under nourishment impinges on adult productivity and retards cognitive development in children, undermining economic growth in the longer term," adds the report.