Steep penalties a good lesson for steelmakers

The cost of construction has been on the increase in the country in the past few years.

This has often been blamed on the high cost of acquiring building materials such as steel and cement due to inflation blamed, among others, on Covid-19 pandemic and Russia’s war in Ukraine that has caused shortage of goods. In 2022, the high cost of steel was also partly blamed on the government’s ban on scrap metal due to vandalism of key infrastructure.

It is noteworthy that the rise in cost of construction materials has had an adverse effect on the construction industry.

By increasing prices of construction material like bars, pipes, beams and sheets, the companies have negatively impacted developers and individuals who wish to build decent homes on limited budgets.

A slow-down in the construction industry also means a shortage of jobs for the thousands of construction workers.

It is therefore disheartening to hear that the rise in prices of steel - that is at the heart of the construction industry - was artificially triggered in order to shore up the profits of manufacturers.

According to the Competition Authority of Kenya (CAK), which conducted an investigation in 2020, nine companies colluded to limit importation of certain steel materials and in the process, created artificial shortages that forced prices upwards, contrary to provisions of the Competition Act. For that transgression, CAK penalised the steelmakers a total of Sh338.84 million.

That was in order if, indeed, the companies engaged in the malfeasance. Indeed, the move should prompt CAK, and related government agencies, to be more vigilant to ensure consumers are not fleeced, and the country’s growth undermined, by these or other companies seeking to make super profits by cutting corners. 

Kenya needs businesses that feel and alleviate the pain of the people, but not to worsen it to increase their profit margins.