Kenyans residing in Namanga and Busia are most likely to cross into Uganda and Tanzania in search of more affordable alcohol, as the controversial Finance Bill, 2024 proposes significant tax increases.
According to Anthony Mwangi, Chief Executive of the Kenya Manufacturers Association (KAM), the price of a 250ml bottle of spirits with 40% alcohol content in Kenya will be cheaper by 55%, 77% and 14% compared to Uganda, Tanzania, and other non-East African Community (EAC) countries respectively.
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The proposed increase in excise duty on spirits by up to 79.9% is anticipated to drive a higher uptake of illicit and counterfeit alcohol production in Kenya.
This is despite government efforts to curb the trade, which has led to loss of lives and severe health issues like blindness as consumers turn to cheaper, unregulated alternatives.
“We are really struggling to deal with illicit alcohol but you are pushing people towards this because people have to drink. It doesn’t matter what happens because people will drink but what are they going to be drinking? Even during COVID, people were drinking yet the bars were closed.
“What happens to illicit substances when they drink, alcoholism, health problems. And these are areas where the government is continuously pushing people to illicit alcohol,” said Mwangi.
Ksh.16 per Centimeter on Spirits
Also Read: Car Batteries to Cost Ksh.9,000 More in Finance Bill 2024
The Finance Bill 2024 proposes to introduce excise duty at Ksh.16 per centimeter of pure alcohol on spirits, Export and Investment Promotion Levy (EIPL) at 3% on Rum and Vodka and Delete Section 14 of the Excise Duty Act.
This means the average price of spirits is expected to surge from Ksh.356.42 to Ksh.640, with 95% of the spirits portfolio being affected.
The minimum price increase for compliant producers is set to be Ksh.100 per 250ml bottle with 40 percent alcohol content.
“Today if you are in Busia you can walk across Uganda and have a drink then you come staggering back to Kenya the same for those nearing Tanzania, you just cross and buy your alcohol then come and sell it in Kenya,” he added.
As the debate over the Finance Bill 2024 continues, the potential impact on consumer behavior and public health remains a significant concern for stakeholders.
If the Finance Bill is implemented as is, there will be an increase in the cost of production, thereby destroying industry’s competitiveness, and subsequently, dent local and export markets.
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