2011 is just about to officially become, if it hasn’t already, as the year inflation reached new heights in Kenya.
As Kenyans ushered in the New Year an uninvited and unwelcome guest came knocking on their doors; an increase in price of cooking oil. Prices of locally manufactured cooking oil, which is processed from crude palm oil imported from Malaysia and Indonesia, increased by about 12 per cent in the last quarter of 2010.
Four months later, hungry and angry Kenyans opted to walk to work in solidarity to protest against the inflated costs of fuel. Fuel prices soared above the Sh100 litre level trailing the rise in crude oil. This cost has not just been felt by motorists alone; when the cost of fuel increases by even a shilling, commuters on buses and matatus suffer the consequences as fares double or even triple. The government blamed the rising cost of fuel on the unrest in the Arab world and the poor performance of the Kenya shilling against the US dollar. The price is feared to go even higher.
Two months further down the line there was a public outcry again from wananchi as the cost of maize flour sky-rocketed. A two-kilogramme packet of flour was retailing at an average of Sh150 in Nairobi supermarkets having risen from Sh70 since December. This forced wananchi to switch preferences from their staple food ugali to other alternatives like potatoes, spaghetti and rice. The Drought that hit the country in the first half of the year pushed market prices to Sh4, 500 per bag, from below Sh3, 000 last year, with millers doubling flour prices from Sh70 per packet at the beginning of the year.
Just recently, the cost of sugar followed suit. Sugar prices rose from an average of Sh75 per kilogramme in January to Sh200 this month as cane shortage forced most of the millers to operate below capacity, causing an acute supply shortage in the market. To manage stock, most supermarkets are regulating purchase by limiting the number of packets each shopper can buy.
Local sugar millers, led by the largest and most efficient player Mumias, said they expect high prices to carry on into next year. There was a bit of relief last week when Mumias published a notice in the local dailies outlining its retail prices as sh120, sh240 and sh600 for 1, 2 and 5 kg’s respectively. The price of a 2kg packet was selling at Sh420 although getting one was down to sheer luck as shelves were all but empty.
A report by Patrick Mayoyo of the Daily Nation today blames low imports for the current sugar crisis. According to Agriculture Permanent Secretary Romano Kiome, out of 260,000 tonnes of duty-free sugar from Comesa that was expected to be imported into the country from February only 10,000 tonnes had arrived. “Our inquiries have revealed that the current sugar crisis is largely due to lack of the commodity in the Comesa region”, he said.
The report also alleges that the acute shortage is down to bureaucracy at the agriculture ministry, the export of 15,000 tonnes of sugar by Mumias Sugar Company to the European markets and closure of the company for three weeks for maintenance.
Poor weather and increased transport costs have also seen the prices of vegetables sky rocket. Just one small tomato now goes for Sh5 to Sh7, to Sh10 for a medium sized one in Nairobi’s Eastland’s. Fruits have also become a luxury as consumers have been forced to dig much deeper in their already strained pockets to afford even the most basic commodities. This situation has forced many families to survive on one meal a day.
The steep rise in food and energy prices has pushed inflation to its highest level. Speculation has been rife that hoarding is the main cause of the augmenting prices of sugar and maize flour but the looming drought in most parts of the country has also been cited to aggravate the situation. Data from the Kenya National Bureau of Statistics (KNBS) indicates that inflation rose to 15.53 per cent in July from 14.49 per cent in June. This is way above the Central Bank of Kenya’s target of five per cent. All hope is not lost however as prices are expected to start falling from September as the country enters the harvest season.
When leading the nation in marking the country’s 48th Madaraka Day celebrations in May, President Kibaki assured Kenyans that the government is taking both short and long term measures to cushion them from increased food and fuel prices and appealed to them to remain patient as the government puts in place measures to counter the severe effects of inflation. “I am fully aware of the hardships being faced by Kenyans due to increased food and fuel prices”, the President declared.
The zero rating of duty on paraffin, a drastic reduction of duty on diesel and taking measures to boost the agriculture and livestock sectors have been cited as some of the government’s efforts to alleviate the hardships being faced by Kenyans.
The government however does not seem to be doing enough (or rather nothing at all if you ask wananchi) and especially after seeing the headline in Tuesday’s Daily Nation; ‘MPS DIP INTO RELIEF FUND FOR TAX ARREARS’. The news story reported that MPs have raided money set aside for relief operations and other national emergencies to settle their tax arrears. The money will come from a relocation of funds from the national contingency fund to the budget of the National Assembly. The public kitty will also be used to compensate MPs for the income they will lose once they start paying full income taxes.
Even amidst the food crisis facing Kenya, especially in the northern region which has been declared a national disaster area, the law makers, or as Kenyans refer to them wenye nchi, are walking away with a whooping Sh2 billion, reducing the money that is normally set aside for national emergencies to zero.
As the lawmakers justify the relocation, arguing that it’s the role of the employer to remit tax to the Kenya Revenue Authority on behalf of the government, the Forum hopes that Kenyans are taking notes. The 2012 elections are not far away.