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Seems Kenya is slowly but surely sliding back to Price Controls aka Command & Control:
Price Caps - Consumers & GoK force Price Caps on Oil Marketers. Not fair since it might kill off competition & the pricing formula places too much power into the hands of GoK/Ministry of Energy mandarins. No 3rd party oversight like South Africa.
Price Floors - Safaricom & Telkom want to protect their margins by 'lobbying' GoK to force Airtel to charge a minimum. Though GoK/CCK has not agreed to it, Airtel may be bludgeoned into accepting implied Price Floors through subtle threats.
Other potential Price Controls or throttling competition [including an untested law on competition]:
- Airtel, Yu & Orange want in on Safaricom's M-Pesa phenomenon. Nonsense. Build your networks EXCEPT for 'fair' clearing house fees.
- Banks must have leaned on CBK Governor to make Forex Bureaus less competitive. Wrong. Wrong. Wrong. Increase the oversight on the Forex Bureaus with heft penalties for abuse. Forcing us to go to banks who nickle & dime us? Unfair!
- Mastermind convinced GoK to amend the tax rules for cigs [in favor of MM]. BAT fights back by adjusting prices DOWNWARDS. MM complains.
What I prefer is open access [with fair interconnection fees] to all players who agree to minimum quality requirements.
What galls me is the lack of ATMs everywhere. Yes, we have great competitors/alternates in M-Pesa, Airtel Zap & Orange Money & YuCash. Yet, sometimes I want cash at odd hours. Anonymously. I am NOT comfortable going to a M-Money agent for a large sum [40,000/- or $500] then walking out. Who knows who he knows?
The chap has my mobile number. He has my ID number. He knows how much I withdrew. Or deposited. I like ATMs coz I figure HAL is still a benign chap. For now.
So back to my the crux of the matter. Instead of pushing price caps for M-Money, let's encourage Open Access between the players including Banks, PesaPoint, PesaPal, Telcoms, etc
ATMs - In 3 years from 1,078 (2007) to 2,052 (2010) is pathetic. Not even 100% while bank profits, loans & deposits have grown at least 100% for most banks since 2007. Check www.bankelele.blogspot.com for Bank Ratings.
Just my 2 cents!
7 comments:
On price controls I see MoE giving up on the price formula - cause with the MidEast blowing up, and oil prices inevitably going up, you have to pass the buck. right? Or is there intelligence that the price issue is so sensitive to a burdened population
- Airtel low prices are not in all their Africa markets, so they are making a case to hammer Safaricom - But if they raise prices, they will lose their credibility (again)
- Which bank are you with, that ATM's are a problem?
I see how MoE or ERC would use 'suspension of Price Formula' to pass the Buck...
Notice how quiet the OMCs are now. Except they are trying to change the formula to reflect better cost inputs including demurrage costs + KPC delays.
Airtel in Zambia is dominant so not sure what they do there. BTW, I know they are low-price leaders [or helped push it down] in Uganda & Ghana where they are either #2 or lower!
My point is that there are NOT enough ATMs. Plus not all are connected i.e. for an additional fee [to cover costs] you should be able to use other banks ATMs.
Government interference in markets is never a good thing. I struggle to believe that the current fuel shortages are logistical. In my opinion its a case of fuel companies hoarding for either better prices or in hope that the MoE will give up.
I hear you on ATMs.It's impossible to get cash upcountry. On a positive note,I noticed VISA charges are now 65bob for withdrawals from a different bank's ATM.
Kenya's OMCs don't have much capacity for storage coz GoK never provided enough incentives for that...
Most storage is owned by KPRL, KPC & KOSF... all GoK controlled entities. The storage that OMCs have is primarily for distribution to their networks/stations.
BTW, with price caps... hoarding is going to happen. And shortages. The ERC formula is not audited by a 3rd Party unlike South Africa...
this is probably tha worst blog in tha country!
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