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BAT Kenya turns gaze to Southern Sudan

By | July 9th 2011

By Patrique Githinji

Cigarette maker, British American Tobacco (BAT) Kenya is one of the many firms waiting on the sidelines for the establishment of an independent Southern Sudan.

The firm says it is waiting for the Government of South Sudan to establish regulatory framework to begin cigarettes shipments to the market.

“The potential is huge and we need to work with certain authority once the structures and regulatory have been established so that we can begin exports,” BAT Kenya Managing Director Gary Fagan said.

Fagan said including Southern Sudan in its market will increase its revenue, but pointed out that the firm will continue using the Kenya manufacturing plant to manufacture for the market.

Fagan said the firm is in discussions with the South Sudan Government about issues such as the level of excise duty that will be charged on the cigarettes.

Fagan was speaking at an investors briefing in Nairobi, where he announced the group unaudited financial reports for the six months that ended June 30.

In the first-half profit grew up by 14 per cent as revenue surged amid increased domestic sales and higher exports. Net income climbed to Sh1.17 billion in the six months through March from Sh1.02 billion a year earlier. Revenue jumped 51 per cent to Sh9.1 billion.

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The firm decried illicit trade, which it said was hurting its revenue. Fagan said the practice had reduced the total cigarette market by five per cent reduction last year.

A recent industry report shows that illicit trade in cigarettes accounts for 12 per cent of total consumption in Kenya.

Fagan proposed the collection of tax from the border entry points as one way of cutting down on the vice. This, he said, would put off unscrupulous traders who are finding it easy to re-route export cigarettes. The practice is said to cost the government an estimated Sh5 billion annually.

BAT Kenya serves as a hub for 17 African countries most of which are landlocked and import directly from Kenya.

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