Future of tobacco sector in Kenya hangs in balance over lack of proper laws

tobacco growers  in Kenya

It is emerging that Kenya does not have a firm position on handling tobacco.

Mention the word cigarette to the Ministries of Health and Environment and you are likely to hear the word “hazard.” But mention the same to the Ministries of Agriculture and Finance and you will hear the word “money.”

As the world’s debate on how to handle smoking continues, farmers, manufacturers, policy makers and anti-tobacco activists are unable to say for sure whether their anti-smoking campaigns have reduced the habit, which is blamed for many health complications including cancer.

Over the past two weeks, two sides of the divide have given their perspective with farmers lamenting that for lack of alternative markets, they are stuck with tobacco growing.

British American Tobacco (Kenya) Ltd agrees, and says that tobacco farming is on the increase with some farmers approaching the company to join in the growing.

However, the company is quick to point out that the area under tobacco has shrunk over time, but production increased as BAT supports farmers with inputs to increase yields while ensuring they leave larger portions of their farms for other crops.

Addressing journalists in Nairobi recently, the company decried what it calls demonisation of an industry that is at the core of the country’s economy instead of crafting a collective position.

“Despite the anti-smoking campaign, there is no evidence that people are smoking less,” said Selena Olende, head of corporate affairs.

The company is now asking the concerned ministries and tobacco manufacturers to work together to forge a way forward for the sector whose path remains unclear despite the crackdown through the Tobacco Control Act, which restricts the promotion of tobacco products.

The manufacturer laments that cigarette makers are not involved in debates touching on their products, unlike other countries like Malawi that has a clear position on its tobacco industry.

Fears are rife that continued blanket restriction is encouraging a smuggling syndicate that could lead to a defeat of the objects the Act seeks to achieve.

“Counterfeiters will sell cigarettes to anyone because they don’t care about the laws, while the country is losing billions in revenue,” said BAT regulatory affairs manager Eric Kiniti.

With such a hazy future, BAT Kenya is looking at other revenue streams, and although details are still scant, it has already diversified into the export of semi-processed tobacco after investing Ksh350 million ($4.35 million) in a processing plant. Financial controller Sophia Mukoba said the company is exporting to Egypt and the Middle East.

The company posted a 19 per cent rise in pre-tax profit over the first half of this year, with profits climbing to Ksh1.46 billion ($18.1 million) from Ksh1.22 billion ($15.1 million) the previous year, while its gross turnover climbed 12 per cent to Ksh10 billion ($124.3 million) on the strength of an improved economy.

BAT’s domestic sales volumes also grew by six per cent over the first six months compared with last year when its half-year sales ran into trouble due to stringent policy measures under the Tobacco Control Act 2007, dipping by 12 per cent.

The Act, which prohibits smoking in public places, demands the establishment of smoke-free zones in cities and buildings, bans tobacco advertisements, and introduces larger warning labels on cigarette packs.

The law, to be enforced by public health officers, local authorities and the police bans the selling of cigarettes in single units, and proposes stiffer taxation of tobacco firms besides encouraging the cultivation of cash crops other than tobacco.

The cigarette maker estimates that counterfeiters pocket upwards of Ksh100 billion ($1.24 billion) each year from sales in East Africa.

To help curb smuggling, cigarette makers have lobbied Treasury to reduce tax on tobacco products to make it less attractive to counterfeiters. In the 2009/10 budget, Treasury maintained the hybrid structure of excise, which combines both product characteristics and the real selling price, with physical characteristics being the dominant factor.


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