Kenya’s appetite for tobacco products is growing despite stringent government regulations to control consumption.
British American Tobacco Kenya noted that for the first time since 2010, domestic revenues exceeded export revenues for the year 2013.
Speaking during BAT annual general meeting Tuesday, BAT regional financial director Philip Lopokoiyit said local revenues were at 55 per cent compared with export revenues at 45 per cent.
“Regulations do not inhibit our ability to compete — consumers are trading up from lower value products to big products; this has played a part in increased revenue,” explained regional managing director Chris Burrell.
Continued growth in local market sales indicates that the firm has defied effects of the Tobacco Control Act 2007, which controls smoking in public places and bans tobacco advertisements.
Government targets “sin tax” from cigarette and alcohol to increase revenue. The pair contributes about 90 per cent of the total excise tax collected in the country.
The tobacco industry has however shown resilience over strict and unpredictable tax regime.
For the year 2013, BAT excise and VAT payment grew by 11 per cent to Sh14.5 billion, putting it in fourth position among the largest taxpayers; its gross turnover on the other hand increased by five per cent to Sh31.9 billion.
According to Euromonitor International which tracks commodity markets, the upward trend in cigarette consumption in the country is expected to hit an all-time high by 2016, despite strict regulations.