The plan by MPs to use the Finance Bill to attempt a reduction in current high food prices is welcome but barely sufficient. It’s a short term and equally an unsustainable mitigation measure.
The move by the National Assembly is a kneejerk political reaction meant to address symptoms rather than the root cause of the problem.
Amendments to the Finance Bill, a key legislation that spells out revenue generation measures, will mean a delicate balancing act between further taxation on other sectors and relief on food sector. It’s a case of digging three holes to fill one.
The expected supplementary budget to reallocate funds to sectors contributing to high food prices exposes government on poor planning, coordination and regulation.
Taxation on food prices is a secondary issue. The primary issues include waning political goodwill to address consumer protection – from surging inflation, poor regulation of food imports, failure by government to incentivize maize farmers and overall, lack of transparency and accountability in managing the National Cereal and Produce Board.
It is not clear, for instance, why the Agriculture sector remains the most poorly regulated as characterized by middlemen who exploit both farmers and consumers alike.
Creation of Agriculture, Food and Fisheries Authority (AFFA) has not helped matters in terms of cutting the rampant wastage and corruption within the food production sector.
Cutting taxation on food products without addressing the cost of transport and manufacturing as well as stemming the price-fixing cartels within the cereals sector will not cure the high food prices.
The National Treasury will need to relook at the possibility of offering incentives on farm input costs while encouraging commercial farming by weeding out middlemen through timely purchase of local cereals on competitive prices offers.
Kenya has no justification of relying on food imports. Measures to address food insecurity must be dealt at high levels of government.
Short of well informed measures, any short term price reduction will again rise to a record high after the forthcoming elections.
In view of this, we urge the government to do more beyond reviewing taxation through finance bill. Government must walk the talk in fighting corruption rings in the maize, milk and sugar cartels, among others.