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Tag: Kenya

  • Kenya: Illicit Cigarettes Jump to 37% of the Market 

    Kenya: Illicit Cigarettes Jump to 37% of the Market 

    Kenya is losing more than Sh9 billion ($69 million) annually in potential revenue (taxes and levies) to the illicit cigarette trade, a new report now indicates, with almost all of these products being smuggled into the country. The newly released findings from a study conducted by international research company Kantar indicate that the illicit cigarette trade in Kenya has soared to a record high, with more than one in three cigarettes sold in the market not paying taxes.

    BAT Kenya is calling for urgent action by the authorities to tackle and mitigate the profound implications of illicit trade in cigarettes, and said “this alarming situation calls for drastic, multipronged action to seal the loopholes and protect legitimate business in Kenya.”

    “This alarming rise in illegal cigarette trade is not only depriving the Kenyan government of vital revenue needed for the country’s economic stability, but is also undermining the security and livelihoods of thousands of Kenyans in our value chain,” BAT Kenya managing director Crispin Achola said. “The illicit trade in cigarettes is not only an economic issue, it is a matter of national security and public interest.”

    Last year, the value of smuggled and counterfeit goods seized at Kenya’s entry points, reached Sh243. 5 million ($1.9 million), according to Kenya Revenue Authority (KRA), up from Sh200 million ($1.5 million) the previous year. Reports also suggest illicit cigarettes jumped from occupying 27% of the market to 37% in just one year.  

  • NewCo Funding Clean Water in Kenya

    NewCo Funding Clean Water in Kenya

    NewCo announced a new initiative where it donates $300 to provide clean and safe water to Masaai communities in rural Kenya for every container of African-origin tobacco it sells.

    “As we celebrate 20 years of proudly serving our suppliers and customers, we want to give back to the communities that make our work possible,” NewCo owner Rainer Busch said. “Over 40% of Kenya’s rural population lacks access to clean drinking water, forcing families – especially women and children – to walk long distances daily just to fetch water. Many rely on contaminated sources, leading to severe health risks like cholera and dysentery.

    “With your support, we can fund sustainable water solutions; improving health, reducing hardship, and empowering entire communities.”

    NewCo is also accepting donations for the cause, with Busch saying, “Any amount, big or small, can accelerate our impact.”

  • Report: BAT Kenya Has $28 Million Tax Discrepancy

    Report: BAT Kenya Has $28 Million Tax Discrepancy

    Members of the Tobacco Control Research Group (TCRG) and The Investigative Desk claim to have found a $93 million discrepancy in revenue reported by British American Tobacco Kenya for 2017 and 2018, which would result in $28 million in missing tax revenue for the country. According to the report published by the University of Bath’s TCRG, government documents and data on cigarette consumption and prices found numerous contradictions, including “millions of cigarette packs unaccounted for, leading to [missing] revenues and therefore tax that would normally be expected.”

    “In the absence of a convincing explanation, this looks like tax avoidance and potentially evasion,” Leopoldo Parada, Reader in Tax Law at King’s College London, said.

    “BAT Kenya firmly rejects all the allegations made regarding the discrepancy between its published financial disclosures and data,” a spokesperson for the company said in a statement. “The company pays all taxes in line with applicable laws.”

    The report authors have asked the Kenya Revenue Authority (KRA) if they will investigate, but have not yet received a response.

  • Kenya to Update Tobacco Law

    Kenya to Update Tobacco Law

    Photo: tatabrada

    Kenyan lawmakers want to update the 2007 Tobacco Control Act to account for new nicotine products, reports Nation.

    Established to control the manufacture, production, labeling, sale, sponsorship and promotion of tobacco products, the 2007 legislation did not anticipate nicotine products such as e-cigarettes and pouches. Its most recent amendment dates from 2009.

    The currently proposed amendment, tabled by Senator Catherine Mumma, will extend the Tobacco Control Act’s provisions to electronic nicotine-delivery systems, their refill containers and nicotine pouches. It also seeks to control the advertisement of electronic nicotine-delivery systems and modern oral products. In addition, the amendment will require manufacturers to secure approval from the Cabinet Secretary for Health for the manufacture, importation, distribution, storage or sale of nicotine products.

    “The principal objective of [the bill] is to amend the Tobacco Control Act to provide for the regulation of electronic nicotine-delivery systems that include electronic cigarettes and related products, regulate the sale of tobacco and tobacco products for persons under the age of 18 years, regulate advertisement and ensure prior authorization of tobacco and tobacco products by the Cabinet Secretary,” said Mumma.

    The number of Kenyans who smoke has been increasing over the years and is projected to hit 3.61 million by 2029. According to Consumer Insights, Statista, there were about 3.1 million tobacco users in Kenya at the end of 2022.

    Statista notes that the number has been rising in the past 15 years and is estimated to increase by another 5.8 percent over the next five years.

    Stakeholders have been urging the government to increase tobacco taxes to curb the rising cigarette consumption, especially among young people.

    “We want cigarettes and tobacco products to be expensive so that they are out of reach of children,” said Celine Awuor, CEO of the International Institute for Legislative Affairs, during the third annual Conference of Tobacco Taxation hosted by the National Taxpayers Association, which was reported by Africa Science News.

    “We are having products that are cheap and relatively affordable, meaning that young people are able to access and pick up these habits early and then get hooked into addiction.”

    Currently, taxes in Kenya constitute 32 percent of the retail price, well below the World Health Organization’s recommendation of between 70 percent and 75 percent. And whereas the WHO advocates uniform taxation for all tobacco products, the Kenyan cigarette tax system distinguishes between filtered and unfiltered cigarettes.

    Meanwhile, Tobacco Control Board chair Naom Shaban highlighted the challenges presented by illicit tobacco products, which have been gaining market share. “These products are dangerous because we don’t know their contents and they bypass health regulations,” Shaban was quoted as saying.

  • Cigarette Prices up in Kenya

    Cigarette Prices up in Kenya

    Photo: Taco Tuinstra

    Tobacco companies in Kenya have increased cigarette prices even after the government withdrew a proposed excise tax increase, reports The Star.

    Following price hikes of between 20 percent and 33 percent, the price of a single cigarette has increased by an average of KES5 ($0.03) at the retail market. Sportsman, one of the most common brands, now costs KES20 per stick with a packet retailing at an average KES400.

    Originally, the government had planned to increase cigarette taxes to KES4,100 per 1,000 sticks from KES4,067.03 per 1,000 sticks. However, following countrywide protest (which also targeted other tax hikes), President William Ruto declined to sign the legislation into law.

    The tobacco companies who since increased the prices earlier opposed the treasury’s proposals, arguing that the measure would stifle the formal industry and boost illicit trade.

    BAT Kenya attributed the price hikes to rising production costs.

    “Over the past year and into 2024, there has been a significant and sustained rise in our cost of production, occasioned by economic turbulence across both our domestic and export markets, arising from global and domestic geopolitical disruptions, currency fluctuations and rising interest rates, which has adversely impacted our trading environment,” the firm told The Star.

    The price increase, it said, was necessary for the business to navigate an increasingly challenging operating environment and enable the company to continue to meet its business obligations, including supporting the livelihoods of over 80,000 Kenyans in its value chain.

    BAT Kenya’s profits declined 19.2 percent to KES5.57 billion in 2023 due to higher operating cost and lower sales volumes.

  • BAT Kenya Sells Pouch Equipment

    BAT Kenya Sells Pouch Equipment

    Photo: BAT

    BAT Kenya is selling the equipment at its oral nicotine pouch factory in Nairobi, reports Business Daily.

    The facility has been idle for nearly five years due to the government’s failure to issue a license for commercialization of the new product.

    The cigarette maker announced the decision on July 25, in a commentary accompanying its financial results for the six months ended June 2024, in which net profit dropped by 24.3 percent to KES2.14 billion ($16.4 million) on lower sales and higher finance costs.

  • BAT Kenya Ups Leaf Price to Secure Supply

    BAT Kenya Ups Leaf Price to Secure Supply

    Photo: Taco Tuinstra

    BAT Kenya is paying more for leaf to ensure the security of its supply, reports Business Daily Africa.

    In fiscal year 2023, the cigarette manufacturer increased its per-kilo price by 5 percent to KES198.75 ($1.50) even as the number of contracted farmers dropped to 1,672, down nearly 20 percent from the previous fiscal year.

    Only five years ago, BAT had access to 5,700 tobacco growers in Kenya. The drop has been driven in part by farmers abandoning tobacco in favor of alternative crops such as beans and maize, along with pressure from anti-smoking activists.

    To help stem the decline, the company has been offering free tobacco seedlings, fertilizer and personal protective equipment. In addition, it has encouraged crop diversification by issuing farmers subsidized maize and avocado seeds, allowing them to earn extra income without abandoning tobacco.

    The company has also been introducing hybrid tobacco seed varieties to boost crop yields and disease resistance, and low-cost technologies such as mechanized ploughing and ridges to help growers cut cost and maximize returns.

    BAT Kenya paid KES954 million for its total tobacco requirements in 2023 compared with KES946 million in 2022. Last year, it purchased 4.8 million kg of leaf, down from 8.9 million kg in 2019.

  • Industry Insists on Risk-Appropriate Warnings

    Industry Insists on Risk-Appropriate Warnings

    Photo: lial88

    The tobacco industry is asking the government of Kenya to distinguish between traditional cigarettes and tobacco-free alternatives, such as vapes and nicotine pouches, when crafting health warning labels, reports The Star.

    Kenya’s health ministry is currently gathering public feedback on a proposal that would require cigarette manufacturers to print new graphic health warnings on packs of nicotine products. The consultation ends May 15.

    The industry says that most of the proposed images do not correlate with the products for which they are proposed.

    “We are looking at information that does not mislead the user, is factual and evidence-based,” said BAT Kenya’s scientific engagement manager, Douglas Weru, during a public participation workshop hosted by the Ministry of Health. “The message coming through from stakeholders in this public participation sessions, and which we agree with, is that the images should correlate to the risk associated with the product,” said  Weru.

    The Retail Trade Association of Kenya (Retrak) said the proposed warnings require an amendment to the 2007 Tobacco Control Act, given that many of the new products were not widely available when the law was written.

  • Kenya Gathering Input on Graphic Warnings

    Kenya Gathering Input on Graphic Warnings

    Photo: Vitaliy Sova

    Kenya’s health ministry is gathering public feedback on a proposal that would require cigarette manufacturers to print new graphic health warnings on packs of nicotine products, reports The Standard.

    The new rules will require tobacco manufacturers to display labels covering 80 percent of the packaging of cigarettes, nicotine pouches and e-cigarettes.

    “The objectives of the graphic health warnings are to increase knowledge about risks associated with tobacco use, to deter initiation to tobacco, to reduce tobacco consumption and persuade tobacco users to quit and to break the challenges of languages and the inability to read text-only messages,” said the Ministry of Health in a public notice.

    Some 8.6 percent of Kenyans smoked in 2020, according to World Health Organization data. The government wants to reduce this figure to less than 5 percent by 2025.

    Tobacco industry representatives contend that the proposed measure does not appropriately distinguish between cigarettes and smoke-free nicotine products, such as nicotine pouches, which they tout as less hazardous than cigarettes.

    “There is a need for legislation in Kenya to separate tobacco products from nicotine products and for an appreciation of the role played by alternative nicotine-delivery products,” an unnamed official was quoted as saying. “The current graphic health warnings campaign does not distinguish between the two products.”

  • Kenya to Consult on New Health Warnings

    Kenya to Consult on New Health Warnings

    Photo: 9nong

    Kenya’s Ministry of Health has invited the public to comment on 13 proposed large graphic warnings for tobacco products, reports The Star.

    If the changes are approved, graphic warning depicting impotence, cancerous growths and sick fetuses will also be printed on new tobacco and nicotine products sold in Kenya. Currently, only cigarette packets are required to display such warnings. The law requires a combined picture and text health warning to occupy at least 30 percent of the front and 50 percent of the back of smoked tobacco products. Among the proposed labels is also a message indicating that nicotine pouches are not a safe alternative.

    “These warnings are very important because they speak even to those who can’t read and they attract attention. They also scare people and pass information more clearly and immediately compared to text,” said Joel Gitali, head of the Kenya Tobacco Control Alliance.

    Health warnings were introduced in Kenya as part of the 2007 Tobacco Control Act, which came into force in July 2008 and included requirements for 13 rotating text-only health warnings in Kiswahili and English.

    In 2014, the government introduced 15 new images for smoked and smokeless tobacco packages.  The regulations were to be implemented in June 2015 but were delayed due to a legal challenge by cigarette manufacturers, who lost the case at the Supreme Court. The images were introduced beginning September 2016.

    The 2014 regulations require tobacco manufacturers to rotate the picture and text warnings in a 12-month period.

    However, the law does not state how frequently the health minister must update the warnings. The World Health Organization advises governments to change tobacco health warnings every 12 to 36 months.