Difference between revisions of "Kenya- Country Profile"
Latest revision as of 08:05, 25 September 2019
Kenya is a country of considerable strategic importance for tobacco manufacturing operations in Africa, due both to its influence in the region and its strong and longstanding political links with the tobacco industry.
- 1 Smoking in Kenya
- 2 Tobacco in Kenya
- 3 Roadmap to Tobacco Control
- 4 Industry Interference in Kenya
- 5 TobaccoTactics Resources
Smoking in Kenya
Kenya has the highest recorded smoking prevalence in Sub-Saharan Africa. In 2014 an estimated 11.6% of the adult population (2.5 million adults) used tobacco products, and ten percent of 13-15-year-olds (12.8% of boys and 6.7% girls). By 2017, Euromonitor International estimated that the total smoking population had reached 3 million (2.7 million men and 1.3 million women), and while overall smoking prevalence had fallen slightly to 11%, the total number of smokers in the country continues to rise. 
Since Kenya’s ratification of the Framework Convention on Tobacco Control (FCTC) in 2004, the Ministry of Health has been attempting to enact legislation that decreases the prevalence of smoking. With a growing young population becoming susceptible to tobacco use, there is a continuing need for robust tobacco control legislation in Kenya.
Tobacco in Kenya
Kenya is a major producer of both raw tobacco and manufactured tobacco products, with 17.4 billion cigarettes produced in Kenya in 2016. An estimated 36,000 farmers produce tobacco leaf on around 13,500 hectares of land, primarily in the Nyanza and Western Provinces of the country with some farming in the Central and Eastern Provinces. Nearly 9,000 tonnes of leaf were produced in Kenya in 2017, down from over 10,500 tonnes in 2013.
The tobacco industry claims that growing tobacco is economically beneficial for farmers in low and middle income countries. However there is evidence that this is not the case for smallholder farmers in Kenya. In fact “a significant proportion are operating at a net financial loss” as well as risking damage to their health, through green tobacco sickness and degradation of their environment.
In their research report, the International Institute for Legislative Affairs and the American Cancer Society conclude that, as well as rarely being financially rewarding for individual small farmers, “Tobacco farming is likely hindering, not helping, economic development in the tobacco growing regions in Kenya” and they recommend that the Kenyan government “aggressively seek viable alternative livelihoods”. In its 2018 “Sustainability Report”, BAT acknowledges that food security is an issue in Kenya, but claims it is “working collaboratively with our farmers and their communities to address this”, referring to their support for crop diversification, and the setting up of savings and credit cooperatives. Although BAT states that its aim is to improve the livelihoods of tobacco farmers, their own ‘Stakeholder Panel’ notes that “there remains a lack of objectives that would allow stakeholders to assess the effectiveness of BAT’s efforts”.
Who Dominates the Market?
In addition to being a tobacco growing country, Kenya also serves as a regional hub for the manufacturing of tobacco products.
British American Tobacco (BAT) Kenya began operations in Kenya in 1965 and has dominated the market since that time. In 2018, BAT Kenya held an estimated 78.8% of the market share, which has been increasing since 2015. It exported from Kenya to 17 other countries in the region.
In 2019, BAT’s Managing Director, Beverley Spencer-Obatoyinbo, described BAT’s expansion plans for the region: “We want to look at new markets within EAC [East African Community] and Comesa [Common Market for East and Southern Africa]. We have had some challenges with expansion outside Nairobi manufacturing due to tariff barriers, but we are working with authorities to remove these barriers and allow free trade.”
Kenyan tobacco manufacturer Mastermind Tobacco Kenya (MTK), was established in the late 1980s and controls around 16% of the market. Philip Morris (PMI), whose share in 2012 was nearly 11%, had just over 4% by 2017. In January 2019, the Kenyan newspaper, Business Daily reported that Mastermind was involved in discussions with PMI over the potential sale of a majority stake in the Kenyan company, which would “see Mastermind upgrade its factory to start producing Philip Morris’ products such as Marlboro”. A few days later, the same newspaper reported that Mastermind had agreed to settle a KSh2.9 billion (nearly GB£22 million) tax dispute with the Kenyan Revenue Authority (KRA), and that it would be forced to sell property assets to do so. Wilfred Murungi, Mastermind’s founder and owner, died suddenly in June 2019 leaving the status of the sale of the company unclear. For more information on Mastermind and the company’s past interference with tobacco control policy see Mastermind Tobacco Kenya.
Tobacco, the Economy and Taxation
Although tobacco production only contributes around 0.03% of Kenya’s GDP, the industry as a whole accounts for an estimated 7%, reportedly contributing large sums in tax revenues to the Government. BAT is consistently listed among the top corporate taxpayers by the KRA, with Mastermind in the top 25. BAT claimed, in 2019, that it had contributed “KSh 80 billion to national revenue in various taxes” over a 5 year period. Consequently, there is a vested interest in ensuring that these key players continue to do business within Kenya.
However, in May 2019, BAT was accused of tax avoidance, after an investigation by the Tax Justice Network and Campaign for Tobacco Free Kids, found that the company had moved dividends out of Kenya to the Netherlands in 2015 and 2016, thus avoiding paying the Kenyan government around Sh2.65 billion (US$2.7million). BAT responded to this report by saying:
“The Group fully complies with all applicable tax legislation where it does business, operates the transactions that occur between Group companies on an arm’s length basis and is a significant tax contributor to Governments worldwide. Classifying countries such as the Netherlands and the UK as tax havens is simply not a credible claim… the tax loss of $58.9m identified by the report simply does not arise.”
The Institute of Legislative Affairs subsequently urged the Kenyan government to introduce a simplified taxation structure to increase revenue and reduce the number of loopholes by which companies could avoid paying tax.
Links to Government
The tobacco industry has a history of establishing high-level political links with the government and using these links to promote its business agenda. BAT has enjoyed strong political relationships and has been “supported by successive Kenyan Presidents— Kenyatta, Moi and… Kibaki—establishing links with a variety of ministers and appointing influential politicians as non-executive directors”.. In 2017, there were reports in the UK media that the Kenyan general election was being contested by “parliamentarians who have been linked to payments by the multinational company”. BAT’s attempts to influence government officials in order to undermine tobacco control measures in Kenya, and other African countries has led to an investigation by the UK’s Serious Fraud Office.
Roadmap to Tobacco Control
For more than 25 years, tobacco control has been on the public health agenda in Kenya, where investment in initiatives to curb the country’s escalating tobacco epidemic began in 1992.The World Health Organization’s Framework Convention on Tobacco Control (FCTC), a treaty that establishes evidence-based tobacco control measures which parties to the treaty are legally obliged to implement, was signed and ratified by Kenya in 2004. Kenyan policymakers have since been advocating for the development of legislation to decrease the prevalence of smoking and safeguard public health.
The Tobacco Control Act 2007
In 2007, following 13 years of drafting and development, the Kenyan Parliament passed the Tobacco Control Act 2007 (TCA), the first step in efforts to domesticate the FCTC. During this time, according to the Ministry of Public Health and Sanitation (MoPH&S) and the Institute of Legislative Affairs (ILA), the tobacco industry had “numerously made attempts; sometimes successfully to influence tobacco control in Kenya” and the delay in the enactment of this legislation was attributed to “ the industry’s manipulation of the parliamentarians”.
The provisions of the TCA included:
- smoke free public places;
- progressive graphic health warnings;
- comprehensive bans on Tobacco Advertising Promotion and Sponsorship;
- tax and price measures;
- public awareness and education;
- public education and information campaigns;
- limiting sales to minors.
However, since this Act was passed implementation has been problematic. A weak legislative framework, lack of political will and corruption have been blamed for effectively stunting its implementation.
Obstacles to Implementation of the TCA
In the 13 years it took the TCA to be drafted, and throughout the subsequent years of its implementation, the tobacco industry persistently tried to weaken its effect and aggressively lobbied policymakers to undermine it. For example, after the Act was passed, BAT Kenya and MTK challenged the new law in court. This led to the suspension of the public smoking ban. Many of its provisions do not meet the minimum FCTC requirements for compliance. The requirements for smokefree places, for example, do not meet the FCTC standards as outlined in Article 8, which call for 100% smoke free places as any other measure fails to provide universal protection against tobacco smoke exposure. Similarly, failure to incorporate graphic health warnings on packaging of tobacco products meant the TCA failed to comply with Article 11.
Tobacco Control Regulations 2014
As a result of the problematic implementation of the TCA, and in an attempt to strengthen the evidence-based framework and support greater adherence to the Act, the Kenya government sought to introduce the Tobacco Control Regulations (TCR) 2014. The proposed Regulations aimed specifically to allow for the effective and stronger implementation of the tobacco control provisions that had already been enacted by Parliament via the 2007 TCA. The Tobacco Control Regulations called for:
- graphic health warnings;
- stronger smokefree legislation;
- an Annual Solatium compensatory contribution (obligating tobacco manufacturers and importers to pay 2% of the value of the tobacco products manufactured in or imported to Kenya back to the government to help offset the costs of treating tobacco related morbidity and mortality);
- protecting public health policies from the commercial and other vested interests of the tobacco industry (reflective of Article 5.3 of the FCTC).
Obstacles to Implementation of the TCR
Despite intense pressure from the national and international public health community, passage of the TCR has been continually impeded by industry interference. In April 2015, shortly before the Regulations were due to come into force in June, BAT filed a legal case against the Ministry of Health in Kenya, claiming that the Regulations were “unconstitutional” and requested that they be dismissed.
On 2 July 2015, the High Court suspended the implementation of the regulations until a final ruling was reached. Nearly nine months later, on 24 March 2016, it ruled that, with a few minor amendments, the regulations should come into effect in September that year. BAT subsequently appealed, further delaying implementation of the regulations. However in February 2017, the Court of Appeal upheld the 2016 high court ruling.After BAT launched a further case in the Supreme Court, the Appeal Court decision was stayed. While the case was heard on 25 April 2018, as of August 2019 - over a year later - the Supreme Court was yet to announce its final decision.
For more information see our page Kenya- BAT's Tactics to Undermine the Tobacco Control Regulations A government proposal to increase tobacco taxes in the 2019 Finance Bill, announced in June that year, came in from criticism from BAT, with Beverley Spencer-Obatoyinbo claiming that increased smuggling from Uganda was threatening BAT’s business, and therefore tobacco manufacturing and jobs in Kenya. Around the same time, in 2019, the company announced their intention to start selling nicotine pouches as a “tobacco-free” option for Kenyans.
Nairobi City County Tobacco Control Bill 2018
Nairobi City County implemented national laws restricting smoking in public places, enforced by plain clothed public health officials threatening high fines and potential arrest, but according to press reports this has met with only limited success. Research in 2016, found that cigarettes were easily available to children and were being sold singly near primary schools. The Nairobi City County Tobacco Control Bill, tabled in December 2018, aimed to introduce greater regulation of tobacco in Nairobi by creating a new county department responsible for issuing licences to all manufacturers, distributors, suppliers and retailers of tobacco products, with fines for non-compliance. The bill proposed:
- restrictions on retail locations (health or educational institutions, parks and other public entertainment areas) and at points of sale, including keeping tobacco out of sight and clear signage prohibiting sale to under 18s
- rules governing second hand smoke, and the definition and extension of public smoke free areas.
- provision of health and cessation services, and public education
It also covered regulation of interaction between public officials and the tobacco industry, with clauses on disclosure, and a code of conduct for all those “involved in setting or implementing public health policies for tobacco control”. In early 2019, local media reported BAT protests against this bill. During the public consultation phase many of BAT’s arguments were also used by Kenyan business groups, along with others commonly used by third parties working with the tobacco industry. For details see our page on BAT Kenya- BAT's Tactics to Undermine the Tobacco Control Regulations The bill was passed after its third reading on 12 June 2019.
Industry Interference in Kenya
Tobacco companies like BAT have continually employed a variety of tactics to hinder policy progress in Kenya, including: lobbying and engaging senior policymakers; exerting influence through third parties and trade committees; and filing legal claims.
To read more about the extent and frequency of tobacco industry tactics to undermine progress in Kenya, see:
== Notes ==
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