The Kenyan parliament today passed a law that empowers the finance minister to fix prices of “essential goods” in an effort to tame unscrupulous traders who exploit wananchi with arbitrary price hikes. That is the story the sponsors of the bill want us to believe. Trade Minister Amos Kimunya has criticized the bill as a bad signal to investors. Kenya, he said, is still committed to the principles of economic liberalization. I concur with Mr. Kimunya’s criticism of the bill. Hayek’s old wisdom about the impossibility of controlling the economy still holds; You can’t fix retail prices without also having to fix the costs of production, transportation, advertising etc. And don’t even get me started on the demerits of allowing politicians – like Finance Ministers – to have this much power over the market.
The market definitely needs responsible regulation but in this instance the best way to protect wananchi, if this is the true aim of parliament, would have been to reduce the barriers of entry in the relevant industries and let competition and the invisible hand of the market drive the prices down. It is the best way to do it. President Kibaki should reject this bill.
UPDATE: For more read Jaindi Kisero of the Nation
So the president just announced a cabinet reshuffle in which he appointed Uhuru Kenyatta to be Minister of Finance. Many in the Kenyan media think that the president made this decision with his succession in mind. Hon. Kenyatta has now occupied the pole position among the wider PNU hopefuls in the ever intensifying Kibaki succession saga.
Me thinks that all this is a bucket of horse manure. Firstly, Uhuru Kenyatta will not be elected president in 2012. Martha Karua or George Saitoti have a better chance. Secondly, why appoint Uhuru to be Finance Minister? What credentials does he have to enable him serve in such a vital ministry? Thirdly, are all government actions forever going to be informed by 2012 political calculations?
As I have indicated before, I think that Amos Kimunya should have remained as Finance Minister. Among the current members of the cabinet he was the most qualified for that position. I like his business mentality and he seemed to be doing a pretty good job before the taint of corruption dragged him down. He may have been corrupt (which one of our leaders isn’t?) but he was the best man we could ever have, under the circumstances, at treasury. Kibaki should have restored him at treasury instead of politicizing the economic management of the country by appointing a hopelessly unqualiffied presidential hopeful.