Eric Githua, Chair of the Alcoholic Beverages Association of Kenya (ABAK), delivered a critical analysis of the state of the alcohol market in Kenya during a TV interview on Thursday.
Githua highlighted a concerning statistic: 59 percent of the liquor in circulation is illicit.
“We conducted an industry research last year in collaboration with the government and realized that 59 percent of alcohol sold in Kenya is illicit; that’s 6 out of every ten bottles,” he disclosed.
Githua also addressed the government’s proposed increase in the excise tax on spirits to 79 percent, as outlined in the Finance Bill 2024.
While he recognized the necessity of taxation, he criticized the proposal as overly burdensome. He advocated for a phased implementation of the tax increase over several years rather than imposing the full 79 percent hike at once.
“There is a proposal to increase the spirits excise tax by 79 percent. We find this quite excessive. Our request is for the increase to be staggered.
79 percent is quite high at once…can it be spread across the coming years?” he suggested.
He elaborated on the potential impact of this proposal, noting, “The current rate is sh.356 per litre of spirit, and with the proposal, it could rise to about sh.640 per litre.
This is significant because we are operating in an environment already burdened with illicit alcohol.”
The broader context of substance abuse in Kenya underscores Githua’s concerns.
According to 2023 data from the National Authority for the Campaign Against Alcohol and Drug Abuse (NACADA), at least 4.7 million Kenyans aged 15 to 65 use at least one narcotic substance.
Of these, 3.2 million either use or abuse alcohol, while 2.3 million use tobacco.
Additionally, 1.7 million individuals consume a mix of multiple drugs, and 964,737 and 518,807 others use khat and cannabis, respectively.
Githua’s remarks draw attention to the challenges faced by the alcohol industry in Kenya, particularly the pervasive issue of illicit alcohol.
This problem is compounded by the proposed tax increase, which could further strain the industry.
By advocating for a phased approach to tax increases, Githua aims to balance the need for government revenue with the economic realities of the alcohol market.
His comments underscore the importance of considering the broader implications of tax policies on both the industry and consumers, particularly in a market where illicit products are already a significant problem.
