PHOTO: COURTESY

Kenyans eat a lot of maize. Which is why, despite the fact that the National Cereals and Produce Board continues to make heavy losses, it is maintained afloat by taxpayer money to guarantee availability of the staple food. In fact, it is apparently cheaper to import maize than to grow it in Kenya. Which is why the government slaps taxes on any imported maize.

I bring this up because it is always interesting to see arguments for a free market and self-regulation being zealously recited whenever there is a proposal to legislate on some key sector. If market forces were so good at guaranteeing the lowest possible price, why does the government keep trading maize?

Not long ago, before the Energy Regulatory Commission started controlling energy prices, there was much argument as to the merit of ‘interference’ and there were loud voices that campaigned for letting the market forces determine the price of petrol at the pump.

Funny thing though was whenever international crude prices fell, we would be told that ‘old stock’ purchased at higher prices was what was being sold. Prices would remain high. When crude oil cost more in international markets, the change locally would be immediate adjustment upwards. The warped logic was that unless fuel companies sold at a higher price, they would not have money to replace stocks.

It is due to such shenanigans that the Energy Regulatory Commission was established under the Energy Act, 2006. And 2010 saw the gazetement of the Energy (Petroleum Pricing) Regulations, which enabled the commission to set the maximum wholesale and the retail prices of petroleum products at a wholesale depot or retail dispensing site.

The prices are usually set for a month, running from 15th to 14th of the next month. ERC set prices for the first time in December 2010. Only then did we see prices falling by shillings rather than cents.

It was realised that it was untenable to continue to let fuel companies run rings around hapless consumers. I would say the ERC has delivered on its mandate well. The foregoing brings me to the current hullabaloo on interest rates.

While the only banking experience I have is that of paying the high interest rates, If I owned a bank, I would not be terribly supportive of the proposed law to curb profits. (yes cutting interest rates will reduce the dismaying and immoral profits our banks keep reporting).

Is it not interesting how the banks have suddenly found their moral compass, promising to bring down the borrowing rate by 100 basis points (a cunning way of saying one per cent) of their own free will?

 Do you not find it just a little bit suspicious that now banks have agreed set aside a combined Sh30 billion to improve access to capital for small and medium-sized enterprises at concessionary rates? Whimpering that they would no longer charge to close accounts was the icing on the cake.

How gracious! Why did it take a Bill capping interest rates for these proposals to be floated? Why is the bank lobby calling on the President to refer the Bill back to the National Assembly?

While I am no economic expert, I gather that there has been catastrophe each and every time a profit motivated ‘private sector’ is given free rein in any field anywhere. The American subprime mortgage crisis is a good case in point where self-regulation totally failed and the banks had to be rescued from collapse using taxpayer dollars.