President Uhuru Kenyatta has thrown distributors and retailers into confusion after directing a price cut on maize flour to Sh100 for a two-kilo packet amid existing stocks.
Retailers with huge stocks are now at a crossroads following the government directive, which is to take effect immediately.
Naivas Supermarket says it is holding vast stocks of flour, which it had bought expensively, and is now waiting for direction from millers on what to do with it.
“We are now waiting for a directive from our suppliers and millers on how we shall handle the existing stocks in the coming days. We are holding a lot of stocks that we had bought earlier,” said Willy Kimani, Chief Commercial Officer of Naivas Supermarket.
Mr Kenyatta announced in Nairobi Wednesday after meeting with the millers and other key government officials at State House, saying processors had agreed to lower the cost from Sh205 to Sh100 for the two-kilo packet.
He said the move was to protect consumers in the wake of the high cost of maize flour in the country, which is beyond the reach of many Kenyans.
Blame
The President accused millers of engaging in cartel-like behaviour, which he said was to blame for the high cost of flour.
He also blamed politicians for the skyrocketing price of the staple, saying they play a role given that the price gain is witnessed in every election year.
“Before the general election in 2012, the price of unga shot from Sh70 to Sh130. In three months to the August 2017 election, the price of unga shot up to Sh189. Months to the August 2022 election, the price of unga has shot up to Sh205. Is it a market dynamic or a deliberate outcome? Mr Kenyatta posed.
The State had on Monday inked a deal with millers to cut the price of maize flour to Sh100 under a Treasury-backed subsidy. However, Mr Kenyatta failed to disclose the amount of money the government would spend.
The Ministry of Agriculture said millers would be offered an undisclosed subsidy to bring down the cost of the staple and provide relief to consumers.
In September 2011, President Mwai Kibaki signed into law a Bill that allowed Kenya to return to price controls of any essential commodity after the practice was abandoned in the 1990s in favour of economic liberalisation.
The law allows the Finance minister to set maximum prices of gazetted essential commodities upon consultation with the relevant industry.
Consumer prices in Kenya have rocketed this year, and inflation hit a 58-month high of 7.9 percent in June, taking it beyond the Treasury’s preferred upper limit of 7.5 percent.
