Intensify crackdown on illicit goods

It won’t have escaped most people’s attention in recent months that there has been a concerted effort by Government to stamp out all manner of illicit goods. Headlines like “Kenya intensifies war on counterfeit goods”, “Rising fears over fake products” and “Fake goods destroyed as suspects are held” have become commonplace.

It is well known that the sale of illicit products, including cigarettes, is a problem. It places consumers at risk of buying deficient goods, deprives the Government of important revenues and provides additional funds to criminals as well as, potentially, terrorists. It is also harmful to those legitimate businesses, like BAT Kenya, who conduct themselves within the law and who always aim to act responsibly.

Because of the threat posed by this illegal market, the Government has been absolutely right to bolster the efforts of its regulatory agencies to crack down on all players involved. Wanyama Musiambo, who chairs the multi-agency taskforce on fighting counterfeits, along with all other government departments involved, deserve substantial credit for their efforts in beginning to address the problem. This should be welcomed by everyone who wants to see Kenya and Kenyans prosper.

However, the terms ‘fake’ or ‘counterfeit’, so often used in the media, can sometimes overlook the wider and more general issue of illicit products. In terms of cigarettes, while counterfeits may exist in the market they are only one part of the problem – albeit a problem that the Government estimates to account for half of the market in some counties. More problematic is the apparent prevalence of the sale of illegal products in the form of tax-evaded cigarettes – i.e. cigarettes with fake tax stamps, cigarettes for export sold in Kenya and not their destination market, and cigarettes smuggled into Kenya.

It is these products, often difficult to detect upon first glance, that pose the most serious problems for government and consumers alike.

If the government is to recoup the billions of shillings in tax revenue currently lost to this illegal trade and if consumers are to regain confidence in the goods they are buying, tackling the issue of illicit products in all their forms is essential. This is as true for cigarettes as it is for other consumer goods.

Even more aggressive enforcement measures are therefore required by government and its agencies to shut down any manufacturers, dealers or traders who are facilitating these activities.

This is in addition to more stability and predictability in the taxation environment as sudden, large tax increases, like the one seen in 2015, can mean consumers gamble on buying much cheaper, illicit products.

The robustness of our own processes means that we are confident in the integrity of our supply chain and the quality of BAT brands Kenyans see in the market. We have long been committed to this and always seek to remedy any potential issues that we are alerted to both efficiently and transparently with the relevant authorities.

The illegal market for cigarettes benefits no one but criminals. Continued and increased government action to stop the trade in them is vital for Kenya’s future success, as well as supporting the realization of President Uhuru Kenyatta’s Big Four agenda on manufacturing.

Beverley Spencer-Obatoyinbo

Managing Director, British American Tobacco Kenya Plc