Uganda remains one of the main sources of these products which also threaten jobs BAT Kenya managing director Sidney Wafula with finance director Catherine Chepkong'a during a media engagement on the company’s half-year financial results/ HANDOUT BAT Kenya has raised fresh concerns over the continued penetration of illicit cigarettes into the local market, warning that the trade is denying the government an estimated Sh12 billion in annual tax revenue.
This is also threatening thousands of jobs and undermining the sustainability of the country's tobacco industry. The cigarette manufacturer said illicit tobacco products now account for about 45 per cent of Kenya's cigarette market, making them the single biggest challenge facing the legal tobacco business despite increased enforcement efforts by government agencies.
Speaking during an interview with the Star on Friday, after the release of the company's half-year financial results, BAT Kenya managing director Sidney Wafula said the growth of untaxed cigarettes is hurting legitimate manufacturers. This, he said, is reducing government revenues and putting at risk an industry that supports about 80,000 livelihoods across farming, manufacturing, distribution and retail.
"The continued rise in illicit cigarette trade remains the most significant threat to the sustainability of the legitimate industry and its value chains," Wafula said. He noted that while authorities have stepped up crackdowns on smuggled cigarettes, more sustained and coordinated enforcement is needed to reverse the trend.
"We are seeing encouraging signs from government through increased enforcement, but it needs to be sustained and significantly scaled up. That is what will make the difference," he said. According to BAT, illegal cigarettes evade excise duty and other taxes, allowing smugglers to sell products at prices below those offered by compliant manufacturers.
The company estimates that the illicit trade is costing the Exchequer around Sh12 billion annually in lost tax revenue that could otherwise support public services and development projects.