British American Tobacco (BAT) Kenya says the illegal cigarette market is causing a strain on local business in the country, and has urged the government to do more to clamp down on illegal activity.
The multinational tobacco company — while announcing its half year results — said the illegal market has significantly grown in recent years leading to a loss on revenue the government recoups from taxes on cigarettes.
BAT Kenya Managing Director Beverley Spencer-Obatoyibo said, “While we welcome the Government’s concerted action on illicit trade, this principally addresses counterfeit goods, which is only a small part of a much wider problem in relation to cigarettes.”
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BAT Kenya said the impact of the illegal market has seen a strain on the company’s contribution to government revenues, which fell by KSh 336 million. It also blamed initial consumer burden occasioned by the 50% excise spike in December 2015 as well as rising inflatory pressures in the country.
“We are concerned that the inflation adjustment for this year was not implemented on 1 July as already mandated,” the company said. “Going forward, a recovery of the domestic business is critical for business growth and to further contribute to the growth of manufacturing as a pillar of the Government’s “Big Four” agenda.”
Despite its insistence on the growing illegal cigarette market and its negative impact on local business, BAT Kenya announced its half year unaudited results on Friday, registering a Ksh2 billion profit and a revenue increase to Ksh17.5 billion.
Ms. Spencer-Obatoyibo said, “During the first half of 2018, profit after tax increased by 3.4% to KSh. 2.0 billion while gross revenue increased by 1.9% to KSh. 17.5 billion.”
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The multinational tobacco company attributed this increase to growth in export volumes and revenues despite what the firm called “a particularly difficult 2017.”
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