The illicit cigarette trade in Kenya has more than doubled in three years, according to BAT Kenya, reports Business Daily. The company says illegal sales accounted for 25.5 percent of the market last year compared to 11.3 percent previously.
BAT Kenya says the increase is due to increased taxes, according to a third-party survey.
“This [shrinkage of legitimate market] has been further exacerbated by the resultant differentials in excise rates between Kenya and its neighboring EAC (East African Community) partner states, with the excise payable in Kenya being double that of Uganda and almost triple that of Tanzania,” BAT Kenya wrote in its annual report for the year ended December.
“To address this dire situation, we continue to call upon the government to enhance local deployment of resources and enforcement as well as collaboration with neighboring governments against the illicit trade in tobacco products.
“Effectively, in 2022 alone, excise duty has increased by 21.3 percent and cumulatively by over 50 percent since July 2019. Such an increase, which is ahead of the average inflation rate for the year, presents an unstable and unpredictable business environment,” BAT wrote in the report.
“This has forced consumers to seek cheaper products in the illegal market.”