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Kenyans spending on bets, alcohol and cigarettes tops Sh300bn

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Kenyans are spending more than Sh300 billion every year on betting, alcohol and cigarettes. FILE PHOTO | NMG

Kenyans are spending more than Sh300 billion every year on betting, alcohol and cigarettes, underlining the high levels of discretionary consumption that defy the jump in the cost of living for households.

Analysis of the financials of the country’s largest beer maker EABL shows that it made gross sales of Sh193.85 billion in the 12 months to June 2022, with about 71 percent of the net takings from these sales attributed to the Kenyan market.

Social problem

Safaricom reported in its financials for the year ending March 2022 that punters had pushed Sh169.1 billion through its M-Pesa platform for betting purposes, while BAT Kenya made regional gross sales worth Sh40 billion, slightly over half coming from the Kenya market.

Spending on betting has been flagged as a serious social problem in Kenya, inviting calls for stricter regulatory measures such as higher taxation and cancellation of licences.

At Sh169 billion in a year, Kenyans are on average pumping Sh463 million every day into betting activities, defying government efforts to curb the activity through higher taxation and increased regulations.

The amounts being pushed into betting through M-Pesa every year would be enough to buy out the shares of any of the listed firms at the Nairobi Securities Exchange, bar Safaricom and Equity Group.

Betting is popular among young people, both employed and jobless who see it as an opportunity to make quick money. While a few punters get lucky and win large sums of money, the activity represents missed opportunities and losses for participants as a whole.

This is at a time when household budgets have become stretched by a sharp rise in the cost of basic goods, and are also yet to recover fully from the job losses and business closures that characterised the Covid-19 containment period between 2020 and 2021.

Other global shocks such as the Russia-Ukraine war have also raised the cost of food and fuel, which has fed into local inflation which is now at a 62-month high of 8.3 percent.

Expenditure on alcohol has also gone up, following a dip in 2020 when restriction measures to control the spread of Covid-19 included the closure of bars and a night curfew that cut drinking hours.

On top of the billions flowing to EABL in alcoholic beverage sales, Kenya’s market is also saturated with other spirits manufacturers —formal and informal — who record huge sales.

The scale of expenditure is reflected in the amount the government has been raking in from excise on alcohol and tobacco products.

In 2021, the Kenya Revenue Authority (KRA) netted Sh28.6 billion in excise from beer, and Sh16.13 billion in wines and spirits excise, the Economic Survey published by the Kenya National Bureau of Statistics (KNBS) shows.

Duty evasion

At the same time, the tax agency estimates that it loses about Sh12 billion every year in excise duty evasion in the alcohol manufacturing sector.

Excise from cigarettes stood at Sh12.3 billion last year, representing a growth of seven percent from the previous year.

BAT Kenya also estimates that illicit or smuggled cigarettes constitute 22 percent of the supply in the market — costing the government Sh4 billion in excise annually.

In the past decade, the government has raised excise rates on alcohol and tobacco products significantly, taking advantage of the increased consumption to drive revenue.

In 2013, beer and wine were charged excise at the rate of Sh70 and Sh80 per litre respectively. Today, the levy stands at Sh134 per litre of beer and Sh229 per litre of wine.

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