RETRAK says enforcement agencies must shift from conducting raids and seizing counterfeit and smuggled products in shops to pursuing manufacturers, financiers Retail Trade Association of Kenya (RETRAK) CEO Wambui Mbarire with Michael Kiragu, national chairman of the Pubs, Entertainment and Restaurants Association of Kenya (PERAK), during a media briefing on illicit trade, in Nairobi/ MARTIN MWITA KENYA’s economy risks collapsing due to rising illicit trade that is knocking out legitimate businesses from the market, with government also losing billions of shillings in tax revenue, retailers have warned.
This also means massive job losses as business cut investments, reduce operations, and some being forced to shut down since they cannot compete with cheaper illicit and counterfeit products which are evading taxes, while also exposing consumers to harm. Retailers have since urged the government to dismantle the supply networks behind the trade, with some linked to powerful individuals with deep government connections.
According to retailers and players in the hospitality industry, the country needs a well-coordinated crackdown on illicit trade which has worsened in the alcoholic and tobacco industry, while also fast-spreading into sugar, cosmetics, clothing and motor vehicle spare parts.
The Retail Trade Association of Kenya (RETRAK) says enforcement agencies must shift from conducting raids and seizing counterfeit and smuggled products in shops to pursuing manufacturers, financiers, transporters and distributors who sustain the illegal trade.
The association wants the Kenya Revenue Authority, Anti-Counterfeit Authority, Kenya Bureau of Standards and National Police Service to establish a joint enforcement framework, designate a lead agency and publish timelines for reporting progress. The warning comes amid growing evidence that illicit products are taking a larger share of the Kenyan market, undermining tax collection, distorting competition and threatening businesses that comply with regulatory requirements.
A Kantar study estimates that illicit cigarettes accounted for 45.1 per cent of Kenya's cigarette market in 2025, up from 34.1 per cent in 2021. The trade resulted in estimated excise duty and Value Added Tax losses of Sh10.2 billion last year and Sh47 billion cumulatively between 2021 and 2025.
The alcohol market is facing an even bigger challenge. Figures presented to Parliament by the ACA indicate that illicit alcohol accounts for approximately 59 per cent of alcohol consumed in Kenya by volume, with an estimated economic cost of Sh71 billion in 2022.
The ACA's latest firm-level survey also found that counterfeit goods accounted for an average of 18 per cent of products across the sectors surveyed, including 21 per cent of motor vehicle spare parts and 19 per cent of alcoholic drinks.