Kenya loses US$928.1M annually to illicit alcohol trade – ABAK reveals
Illicit alcohol now dominates Kenya’s market, with smuggling and counterfeit spirits driving massive tax losses, report finds.
KENYA – Kenya is losing an estimated KES120 billion (US$928.1M) annually in tax revenue due to the growing prevalence of illicit alcohol, according to a new report commissioned by the Alcoholic Beverages Association of Kenya (ABAK).
The study shows that illegal alcohol now accounts for 60% of total alcohol consumption in the country, marking a 27% increase since 2022.
This includes both traditional homebrews such as chang’aa and busaa, as well as counterfeit and smuggled commercial spirits.
Although artisanal brews represent 67% of the illicit alcohol market by volume, the report indicates that the largest losses in tax revenue stem from large-scale operations involving counterfeit products and smuggling activities.
ABAK Chairman Eric Githua noted that tax losses linked to ethanol smuggling have doubled since 2022, with the associated tax gap rising by 144%.
He attributed the growing demand for unregulated alcohol to rising taxes on legal alcoholic beverages, which continue to drive consumers toward more affordable, illegal alternatives.
“The study has established that higher alcohol taxes are pushing more people toward cheaper, illegal options,” Githua said.
“Our aim when we commissioned this study is to help the government understand the size of the problem, comparing it to the 2023 study, as well as identify ways to combat this issue.”
Fiscal losses from the illicit alcohol trade have surged by 68% since 2022, reflecting the urgency of coordinated intervention.
To tackle the growing threat, the report recommends three key strategies: strengthening ethanol regulation and harmonising excise duties across the region, enhancing consumer awareness through targeted public campaigns, and intensifying enforcement mechanisms along with stricter penalties.
ABAK urged a collaborative approach between stakeholders and authorities to address the widespread impact of the illicit alcohol economy on public health and national revenue.
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