British American Tobacco Kenya - Illegal tobacco trade
A major threat is posed by the illegal market for cigarettes, which in Kenya has grown substantially in recent years.
Globally, cigarettes are among the most commonly traded products on the black market. With unsustainable tobacco tax regimes, weak border controls and penalties for perpetrators, the illegal trade in tobacco is a growing problem.
In Kenya, the biggest driver of illicit tobacco trade is tax-evaded cigarettes i.e. cigarettes with fake tax stamps, cigarettes for export that are not sold in their destination market and cigarettes smuggled into Kenya.
We estimate that the illegal tobacco trade in Kenya accounted for over 25% of the market at the end of 2022 – losing government an estimated KSh 6 billion in excise revenues and leading to less government revenue contribution from legitimate cigarette sales.
What can be done?
We see it as vitally important that governments establish workable tax regimes and economic policies that depress the growth of illicit trade, with strong border controls and more aggressive enforcement measures including shutting down manufacturers, dealers and traders who facilitate illegal tobacco trade.
As a key stakeholder in the tobacco industry, we fully support local governments, regulators and government agencies including Kenya’s Inter-Agency Anti-Illicit Working Group and the Anti-Counterfeit Agency, regional bodies including the EAC and COMESA as well as international organisations such as the World Trade Organization and World Health Organization, in seeking to eliminate all forms of illicit tobacco trade.