Illicit Cigarettes: BAT Kenya Study Claims KSh 47B in Lost Tax, but the Data Is Industry-FundedIllicit Cigarettes: BAT Kenya Study Claims KSh 47B in Lost Tax, but the Data Is Industry-Funded
Key Highlights
- Study commissioned by BAT Kenya puts tax lost to illicit cigarettes at about KSh 47B ($364M) in excise and VAT from 2021 to 2025.
- Illicit products made up 45.1% of cigarette consumption in 2025 on the study's estimate, which comes from an industry-funded source and is unverified.
- Excise duty rose 55% from 2018 to 2022 while legal-industry excise revenue fell KSh 1B ($7.7M), which the study suggests may reflect illicit substitution.
A study by research firm Kantar, commissioned by British American Tobacco Kenya, estimates that Kenya lost about KSh 47B ($364M) in excise duty and VAT to illicit cigarettes between 2021 and 2025.
The claim matters because it sits at the centre of a tax debate, yet the numbers come from a company that sells legal cigarettes and has not been independently checked against revenue authority data.
What the study claims
The study estimates that illicit cigarettes made up 45.1% of total cigarette consumption in 2025, meaning nearly half of the cigarettes consumed were products on which taxes were not paid and which also fail other regulatory requirements. BAT Kenya managing director Sidney Wafula described the surge as deeply concerning and said it is not simply a tobacco industry problem.
The report says cigarette excise duty rose 55% cumulatively between 2018 and 2022, yet excise revenue from the legal industry fell by KSh 1B ($7.7M) over the same period. It asks whether higher taxes are pushing consumers towards cheaper illicit products. It also says jobs supported by the legal industry dropped by 4,700 between 2022 and 2025, and that the industry's contribution to GDP fell by KSh 37.7B ($290M).
What is not verified
The figures are estimates from a survey-based study paid for by a company with a commercial interest in tougher enforcement. Mwenendo has not seen matching figures from the Kenya Revenue Authority or the National Treasury, so the KSh 47B total, the 45.1% share and the link between tax rises and falling legal revenue should be read as the industry's claim.
BAT Kenya also warned that Kenya could follow South Africa, where it says illicit cigarettes hold about 75% of the market, and pointed to the closure of its only plant there. That comparison is the company's own and was not independently confirmed.
What BAT Kenya wants
The company calls for stronger enforcement and tighter border controls, disruption of criminal supply networks, a track-and-trace system for tobacco products, faster prosecutions and penalties strong enough to deter offenders. It says it welcomes current enforcement efforts and will keep working with regulators.
BAT Kenya, which says it has operated in Kenya since 1907, is listed on the Nairobi Securities Exchange. It says it has paid more than KSh 90B ($693M) in taxes over five years and exports over 75% of its Nairobi factory output to nine African countries, according to BAT Kenya.
As Mwenendo earlier reported, KRA collected KSh 90.05B in customs revenue in September, which shows the scale of border revenue at stake. Mwenendo earlier reported on how KRA's cargo seal switch changes tracking of goods moving through Kenya.
In Summary
- Who produced the study?
- Kantar, commissioned by British American Tobacco Kenya.
- What does it claim?
- Kenya lost about KSh 47B ($364M) in excise duty and VAT to illicit cigarettes, which were 45.1% of consumption in 2025.
- Which years?
- Tax losses cover 2021 to 2025.
- Where was it released?
- In Nairobi, Kenya.
- Why treat it with care?
- The sponsor is a legal cigarette maker, and no revenue authority figures have been seen to confirm it.
- What does BAT Kenya want?
- Tighter border controls, track-and-trace for tobacco, faster prosecutions and stronger penalties.