Kenya loses an estimated Sh10.2 billion ($78.5 million) annually in excise duty and value-added tax revenue to illicit cigarette sales, which accounted for 45% of the market in 2025, according to a study commissioned by British American Tobacco (BAT) Kenya and conducted by research firm Kantar. Legally taxed cigarettes held a 55% market share, down from 66% in 2021. The study estimates cumulative tax losses of Sh37 billion ($284.9 million) over five years.
Uganda was identified as the leading source of illicit cigarettes entering Kenya, followed by Tanzania and South Sudan. The study attributed cross-border smuggling in part to differences in excise duty rates, with Kenya charging Sh4,100 ($31.57) per 1,000 cigarettes, compared with Sh1,974 ($15.20) in Uganda, Sh1,874 ($14.43) in Tanzania, and Sh1,200 ($9.24) in South Sudan. BAT Kenya Managing Director Sidney Wafula called for more predictable excise tax policies, stronger border controls, and measures to prevent the diversion of transit shipments. Employment across the formal tobacco value chain declined from approximately 80,000 people in 2022 to 75,000 in 2025.
