Taxes, bad laws driving illicit alcohol trade — lobbies
In Kenya, the alcohol industry is grappling with a surge in illicit alcohol trade, with industry players pointing fingers at high taxes and punitive laws as the primary catalysts behind this alarming trend.
According to Eric Githua, Chairman of the Alcoholic Beverages Association of Kenya (ABAK), the convergence of exorbitant taxes and stringent regulations is creating fertile ground for the illicit alcohol market to flourish.
Bills under review in various counties, if implemented in their current form, could inadvertently exacerbate the problem, fostering an environment conducive to the proliferation of illicit alcohol.
ABAK is cautioning against the unintended consequences of diverting enforcement efforts towards legitimate alcohol sales, potentially neglecting the rampant illicit trade.
The lobby says there’s urgent need for a comprehensive reassessment of the legislations to safeguard the interests of all stakeholders. The looming threat posed by these laws in county assemblies extends beyond the realm of public health and safety; it also threatens to undermine revenue generation efforts at both the national and county levels, while jeopardizing the livelihoods of families dependent on the legal alcohol trade.
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Rise of illicit alcohol consumption
The nexus between high alcohol excise taxes and the surge in illicit alcohol trade is undeniable, according to Githua. Abak notes that legal alcohol products play a crucial role in combating the illicit trade, the current tax regime coupled with declining consumer purchasing power has inadvertently fueled the rise of illicit alcohol consumption.
The dire need for policy reform and collaborative action between national and county governments has never been more urgent.
Stakeholders within the alcohol industry, including the Bar, Hotel, and Liquor Traders Association (BAHLITA), are calling for a unified approach to address the systemic loopholes contributing to the proliferation of illicit alcohol.
The recent tragedy in Kirinyaga County, where 13 individuals lost their lives after consuming tainted liquor, serves as a sobering reminder of the urgent need for effective regulation and enforcement measures.
BAHLITA Chairman Simon Njoroge echoed these sentiments, highlighting the adverse impact of overly restrictive regulations on retailers.
He noted that harsher restrictions could inadvertently drive more businesses underground, exacerbating the problem. Njoroge says involving all stakeholders in the policy formulation process is critical to ensure that regulations are pragmatic and informed by the realities of the business environment.
As the debate rages on, only the County Assembly of Nyandarua has thus far passed the new law, with other counties slated to deliberate on it upon resumption from their break in February.
