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{
    "id": 1358107,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/1358107/?format=api",
    "text_counter": 307,
    "type": "speech",
    "speaker_name": "Molo, UDA",
    "speaker_title": "Hon. Kuria Kimani",
    "speaker": null,
    "content": " Thank you very much, Hon. Temporary Speaker. I am not the Chair of the Finance Bill, but of the Departmental Committee on Finance and National Planning. Hon. Temporary Speaker, a lot of conversation has been around subsidy and I will try to take the first two minutes to really explain why subsidies are not a solution to reduction in prices. If you look at demand curve, you have prices on the left and quantity on the right. A demand curve slops from left to right meaning the higher the price, the lower the quantities that people will demand of that particular product. This is when all factors are constant unless that product is a luxury good. A supply curve slants from the right to the left, which means that the higher the price, the higher the quantity that producers will be willing to take to the market because they want to maximise on that high price. A subsidy is supposed to move that supply curve to the right by the price that has been subsidized. The consequence of that should be to reduce the price of that particular good or service. However, what does it actually do? That subsidy goes to the producer who can take advantage of that price to maximise his profits. Let me try to bring it into better perspective. We have seen the great success of subsidising fertilizer, but you will find that the percentage decrease in the cost of fertilizer has not led to a proportionate decrease in the price of maize. Although farmers have saved money in their production, they are still holding onto their maize because they want better prices. The same thing was happening when we subsidised maize flour through the millers or fuel through the oil marketers. They saw a window of maximising their profits and so, we are essentially using taxpayers' money to go into the pockets of a few people who are the oil marketers and the maize millers and consequently, the price is not reduced. The former Cabinet Secretary for Agriculture, Hon. Munya, told us then that the price of maize flour will go down to Ksh80. It never happened. The cost of fuel did not go down despite us sinking billions of shillings, which was never paid. That money has been paid by this regime through this budget. This consequently shows that subsidising, especially consumption, cannot be a way of reduction in prices. It has been proved by very many economic theories. It is practical. Right now, farmers are not willing to sell their maize at a lower cost even though they were subsidised fertilizer by more than 160 per cent. The advantage of this programme is that the money will go to the farmers' pockets, the people at the bottom of the pyramid; Bottom-Up economic transformation. The increase of circulation of money to those farmers by increasing their disposable income because their cost of production is lower than the previous years means that they will spend more and thus increasing velocity of money in the market. Hon. Temporary Speaker, having settled that one, what are some of the highlights as the President said? Education and recruitment of teachers, clarity in JSS, reduction of the cost of fertilizer, moving from curative to preventive health care, the digital highways, the ICT hubs are all geared towards enhancing our human capital. The biggest resource we have been able to prove as a country is not necessarily coffee or tea for export, but human capital. And that is why our remittances from our brothers and sisters in the diaspora are our highest foreign exchange earners. The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor."
}