Illicit brews need not claim more innocent lives

By Tabitha Karanja

The spectre of illicit brews came back to haunt this country in a dramatic, horrific way when tragedy was once more visited upon residents of Nairobi’s Eastlands with the death of 14 Kenyans. The cause: drinking alcohol laced with chemicals.

The story is no longer in the news, save for occasional raids by police across the country reported as "major busts" and a "continuing war" against peddlers of illicit liquor.

In the raids, an all-too-familiar script seems to be playing out. People die. A crackdown is called for. A couple of brewers appear in court. And life goes on. Till the next time.

It seems the problem is more than the actual brews. Because every problem has a solution, how come we are unable to make headway? I think the issue is indifference.

Truth be told, there are no simple solutions to the problem of illicit alcohol. But while the crackdown on peddlers is necessary, it is only a short-term measure.

In my opinion, the problem is (1) Lack of credible, affordable choices to the 75 per cent of drinking Kenyans not catered for by the formal drinks, (2) Taxation laws make it impossible to have cost-effective alcoholic drinks for low-income earners, and (3) An obsession with multinationals and apathy towards support for medium-size enterprises that can successfully bridge the gap.

To raise more revenue meant increasing tax on product inputs in the ‘sin’ category (alcohol and cigarette manufacturers), whose large turnovers gave the Government more money. However, it refused to see that ever more Kenyans were now unable to buy these products.

In return, the highly taxed companies demanded an unofficial "most favoured" trading status — a tax code that made it virtually impossible for any challenger to penetrate the markets they dominated.

This lopsided arrangement is a big contributor to the spectre of illicit liquor. The formal liquor market caters for about 25 per cent of drinkers. What are the rest drinking? You guessed right. Unlicensed brews!

The end result is ironical and cruel. Without more players in the industry, competition that can encourage innovation and more players is low. Government’s need to have more drinkers enter the formal tax bracket remains unfulfilled as more people fall off every year from the formal market. Also, the ones outside are unable to enter the formalised tax bracket due to cost.

To "cure his thirst", the Kenyan turns to underground suppliers whose processes are not standardised or monitored. At some point, it seems the victims are wholly responsible for the tragedy that befalls them. However, nothing could be further from the truth. Who are the drinkers of uncertified alcohol? They are our friends, family and farmers, who can’t afford to buy bottled beer while he toils to provide its ingredients once it is processed.

Bootleggers in slums

They have to deal with the reality of increased taxes on alcoholic beverages inputs. Caught between avoiding these penalties, servicing a growing number of drinkers, while staying away from the official process, bootleggers in slums and villages tap into a new way to process their spirits — lacing brews with chemicals.

Sometimes the health effects are unnoticed for thousands of drinkers — in the short-term. But sooner or later, something goes wrong. Then we start counting bodies.

What should we do? This is not a campaign to make alcohol too cheap. It is to protect all drinkers.

Government deserves credit for its step three years ago to zero rate non-malted beer. Yet even this did little to stem the tide towards unlicensed brews. Secondly, non-malted beer required refrigeration facilities unavailable in the places where the deserving beneficiaries live. Pursuing such a noble initiative with a monopolistic mindset was a recipe for failure.

This mindset also blocks us from solutions within our reach. Case in point is last year’s budget. While it initially leveled tax on local and imported alcohol, lobbying by powerful players reversed it to favour imported products hurting manufacturers attempts to service the lower end market while operating profitably. It doesn’t make any sense, does it?

For years we have argued the case for the low-end market and proposals forwarded to the Government. We have urged for policies that would encourage more small- and medium-size enterprises to help fill the gap for the 75 per cent unserviced market whose only choice was illicit liquor.

The answer lies in a proactive Government approach, by reducing the influence of illicit brewers by creating policies that encourage cost-effective alternatives and encourage more players to carry out this role.

The writer is MD and CEO of Keroche Breweries.