Special Paper No. 15 of 2014 on Situational Analysis of Illicit Trade in Tobacco Products in Kenya

Abstract

Illicit trade in tobacco products imposes many social and economic costs, including increased health expenditure as a result of increased access to tobacco products, and loss of government revenue through tax evasion. Tobacco consumption in Kenya contributes to about 3 per cent of male deaths annually. While the Kenya government has in the past taken several initiatives in terms of legislation and establishing institutions to fight not only illicit trade in tobacco products but also tobacco consumption, illicit trade in tobacco products as well as consumption are still mattering of policy concern. The purpose of this study is to investigate the nature and extent of illicit trade in tobacco products in Kenya and review the relevant institutional framework with a view to gaining insight on the various dimensions of illicit trade in tobacco products. The study used complementary approaches, including key informant interviews; analysis of seizure data; review of literature; analysis of the legal framework; and review of international best practices. The results show that cigarette is the main illicitly traded tobacco product in Kenya. Counterfeit cigarette smuggled through the sea is the main illicit tobacco import, while diverted exports by road form the main illicit product originating from the domestic economy. The key institutional challenges include weak fines, limited resources for Anticounterfeit Agency, and weak coordination and information sharing among different agencies. Regionally, the East African Community (EAC) countries are at different stages of enacting legislation on illicit trade, and this continues to pose challenges in establishing concerted effort to curb the problem. The main conclusion from this study is that illicit trade in tobacco products is a complex problem requiring inter-agency collaboration. Second, effective monitoring, enforcement and punitive fines are necessary for deterring the vice. The study recommends that minimum fines should be prescribed in relevant laws. Also, there is need to increase funding to enforcement agencies, especially the Anti-Counterfeit Agency. Moreover, the various agencies should be obliged to compile and share data to facilitate monitoring of illicit trade and the impact of policies. In the regional context, there is need to advocate for approval of the EAC anti-counterfeit policy and enactment of the EAC Anti-counterfeit Bill to enhance regional coordination in the fight against illicit trade…