Cigarette manufacturing company Mastermind Tobacco says it is the biggest loser in the illicit Tobacco trade on the market.
In a statement, the company said the market is flooded with up to 80 per cent of products bearing the name of its flagship brand Supermatch smuggled into Kenya from neighbouring Uganda.
The company is now asking the government to establish strong border control measures that will curtail the entry of illicit products into the country.
“We are also asking the government to crack down on traders and dealers engaged in the importation of illicit cigarettes into the country and take legal action against them,” said the firm.
A recent survey by its competitor British American Tobacco (BAT) stated that the country is losing up to Sh6.5 billion annually in taxes as a result of the influx of illicit cigarettes, assertions that Mastermind agrees with. The firm now says that if not curtailed, the tobacco industry faces a difficult future and possibly even shutting down which would lead to massive job losses.
“We are concerned at the growing level of illicit cigarettes making their way into the country, especially from Uganda,” Mastermind, whose flagship brand is Supermatch, said.
“We are the biggest losers in the market because when we have 80 per cent of illicit products bearing the name of our product and are sold cheaply in the country, we will not be able to compete.”
Mastermind said it is ready to work with government agencies including Kenya’s Inter-Agency Anti-Illicit Working Group and the Anti-Counterfeit Agency, regional bodies including the East African Community and COMESA as well as international organisations such as the World Trade Organisation and World Health Organisation to eliminate all forms of illicit tobacco trade.
“If we do not work together, we may be forced to shut down because we will not be able to compete against products that are not paying tax,” Mastermind Tobacco stated.
The tobacco industry is the highest taxed in the country with up to 62 per cent, going to the tax collector.
“It will take a concerted and united approach by the market players like Mastermind and all agencies involved to fight this menace that is threatening our economy,” said the company.
Past studies have showed that a majority of consumers buy counterfeit goods (cigarettes included) because they are cheaper compared to original brands while at times the counterfeits are difficult to differentiate from the genuine products.
An estimated one in every five products sold in Kenya is counterfeit and almost four million Kenyans are using counterfeit goods that include sugar, cigarettes, bottled water and cooking oil, posing a serious threat to health and security and depriving the economy of vital revenue.
The World Health Organisation says cigarettes, shisha and smokeless tobacco are being smuggled across borders. These illicit products are untaxed and unregulated, with no health warnings, packaging or labeling requirements; which makes them cheaper, more readily available and accessible, especially to young and poor people.
According to WHO in its slogan “Stop illicit trade of tobacco products,” every year, governments lose $40.5 billion (Sh5.7 trillion) in revenue from the illicit trade of tobacco products. In some countries, illicit trade can reach as high as 40–50 per cent of the overall tobacco market.
“Our countries are at risk, as the illicit tobacco trade is more prominent in low and middle-income countries than in high-income countries,” says WHO
Last month, the Kenya Revenue Authority (KRA) in collaboration with the Inter-Agency Team destroyed an assortment of illicit goods seized from the market worth Sh500 million with an estimated tax value of Sh150 million.