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1 Kg of Sugar Price, Kshs 200
A kilogram of sugar in October last year was retailing at Kshs 80 shillings and now it is at Kshs 200, a 150% increase. A packet of Maize flour October last year was retailing at an average of Kshs.70 and now it’s at Kshs.150 over 100% increase. Shopping in supermarkets is no longer about favourite brands but about the cheapest brand. Indeed at about $2 a kilo of sugar in Kenya this is higher than the U.S. which averages around $1 to 1.50 per kg in many states.
The income of 99% of the poor in Kenya has not increased by the same percentages and unlike the 1% rich who govern and don’t feel this, many making the income they were making last year are today trying to sub-divide the same income to make a living with this high prices. The shilling has fallen to an all time low exchanging at some point at Kshs 107 against the dollar. This has led to us asking the question, how did we get here and who is to blame?
Kenyans asked what have caused the high cost of living attributed many factors. Below some of those factors
Lack of Production and Investment of too much time on the constitution
95% of the high prices of food can be attributed to lack of planning and investment of enough time on food policy. In 2008 to 2010 more than 10 billion hours were put in by 10 million Kenyans discussing the constitution about 1000 hours a person. The government led the people to this and everyday meetings called out in towns by ‘No’ and ‘Yes’ people. This led to the low economic growth because of low production as one topic consumed all the time. Hopefully as 2012 approaches politics will not be the only topic discussed and food policy will also be given some time.
Infrastructure Bonds Interest
In 2009 – 2010 the Ministry of Finance issued several bonds toward infrastructure. These bonds whose interest is repaid via taxation are part of the growth of the government. This has meant Kenyans’ taxes have increased as the interest of the borrowed money is paid.
Growth can either be financed by an expanding private sector and government projects. Or expanding expenditure through printing money or increased taxes. If printing of money is used then you have too much money chasing the limited goods and if too much taxation is used then the tax no matter where levied will lead to hike in prices of the basic commodities consumed by all and in this case sugar and maize flour.
High fuel prices
With the uprising in the Middle East so has the cost of fuel prices gone up and the production costs and delivery costs have thus increased. But of course the barrel of oil has not increased by 150%.
Importation of everything
Kenya is said to have one of the worst imbalances of trade importing almost everything today. This again is a result of Kenyan’s embracing a culture where people believe they do not have to produce and thus rely on imports. This has stagnated economic growth and weakened the shilling. A strong shilling is another sign that the economy balance of trade is strong.