KAMPALA – New research reveals that the illicit cigarette trade is on the rise in East Africa, with Uganda and Kenya facing significant revenue losses and increased smuggling activity. A study by Kantar, an international research company, shows that cigarette smuggling from Uganda into Kenya is driving illicit tax-evaded trade between the two countries.

In Uganda, 34% of cigarettes sold were identified as illicit by the end of 2024, a five percentage point increase in just two years, costing the government an estimated Shs 30 billion annually in lost revenue.

Arthur Bagenze, Country Manager for BAT Uganda, described the situation as “troubling,” saying it undermines legitimate business revenues, livelihoods, and government revenue.

“This is a very troubling situation, where significant economic losses and increasing threats from international criminal networks are undermining Uganda’s business sector and its people. “Illicit trade undermines legitimate business revenues and the livelihoods of thousands of Ugandans in their value chains, including resulting in job losses. The evasion of taxes and duties also deprives the Government of much-needed revenue, hindering its ability to invest in essential public services such as education and infrastructure.”

Bagenze emphasized the need for urgent cooperation between Uganda and Kenya to address the issue, particularly strengthening border controls and enforcing anti-illicit trade laws. He called for more punitive action to deter smugglers and a concerted effort to eradicate illicit trade.

“While the local authorities have made effort to address this menace, this latest research underscores the need for urgent cooperation between Uganda and Kenya. I call upon both governments to act swiftly and decisively, particularly strengthen border controls in the regions where smuggling is most rampant. There is also a serious need to ramp up enforcement of existing anti-illicit trade laws and enhance them in line with the evolving tactics used by illicit traders and ensure more punitive action as a deterrent for smugglers.”

The study also found that the illicit cigarette market in Kenya grew from 28% to 37% in just a year. Bagenze stressed the importance of collaborative action between business leaders, policymakers, and enforcement agencies in Uganda and Kenya to curtail criminal activities and create a stronger regulatory environment.

“It will take a concerted collaborative effort to see meaningful gains in eradicating illicit trade. Business leaders, policymakers and enforcement agencies in Uganda must work with their Kenyan counterparts in taking aggressive action to curtail these criminal activities. “It is imperative to close the gaps that allow cross-border smuggling and create a stronger regulatory environment to prevent further erosion of market integrity and public interest. Together, Uganda and Kenya can dismantle the networks driving this illicit trade and secure a compliant and fair market for all.”