Kenya- Country Profile

From TobaccoTactics
Revision as of 08:05, 25 September 2019 by Editor15 (talk | contribs)
(diff) ← Older revision | Latest revision (diff) | Newer revision → (diff)
Jump to navigationJump to search

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][2][3]

Smoking in Kenya

Kenya has the highest recorded smoking prevalence in Sub-Saharan Africa.[4] 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).[5][6] 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. [7]

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.[4]

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.[8] 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.[7][9][10][11] Nearly 9,000 tonnes of leaf were produced in Kenya in 2017, down from over 10,500 tonnes in 2013.[9]

The tobacco industry claims that growing tobacco is economically beneficial for farmers in low and middle income countries.[12] However there is evidence that this is not the case for smallholder farmers in Kenya.[13][14][15] In fact “a significant proportion are operating at a net financial loss”[14] as well as risking damage to their health, through green tobacco sickness and degradation of their environment.[14][16][17]

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”.[14] 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.[18] 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.[1]

British American Tobacco (BAT) Kenya began operations in Kenya in 1965 and has dominated the market since that time.[2] In 2018, BAT Kenya held an estimated 78.8% of the market share, which has been increasing since 2015.[19] It exported from Kenya to 17 other countries in the region.[20]

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.”[21]

Kenyan tobacco manufacturer Mastermind Tobacco Kenya (MTK), was established in the late 1980s and controls around 16% of the market.[19] Philip Morris (PMI), whose share in 2012 was nearly 11%, had just over 4% by 2017.[19] 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”.[22] 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.[23] Wilfred Murungi, Mastermind’s founder and owner, died suddenly in June 2019 leaving the status of the sale of the company unclear.[24][25] 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.[14][20][7] BAT is consistently listed among the top corporate taxpayers by the KRA, with Mastermind in the top 25.[7] BAT claimed, in 2019, that it had contributed “KSh 80 billion to national revenue in various taxes” over a 5 year period.[26] 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).[27][28] 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.”[27]

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.[29]

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.[2] 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”.[2]. 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”.[30] 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.[30][31][32]

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.[1]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.[33][34] 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.[20] 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”.[20]

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.[35]

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.[7][2][36]

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.[2][37] 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.[38] Many of its provisions do not meet the minimum FCTC requirements for compliance.[39] 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.[35]

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.[40] 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);[41][42]
  • 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,[43] BAT filed a legal case against the Ministry of Health in Kenya, claiming that the Regulations were “unconstitutional” and requested that they be dismissed.[44][45]

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.[46][47] BAT subsequently appealed, further delaying implementation of the regulations.[48] However in February 2017, the Court of Appeal upheld the 2016 high court ruling.[49][47][50][51]After BAT launched a further case in the Supreme Court, the Appeal Court decision was stayed.[30] 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.[52]

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.[53][54] Around the same time, in 2019, the company announced their intention to start selling nicotine pouches as a “tobacco-free” option for Kenyans.[55]

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.[56] Research in 2016, found that cigarettes were easily available to children and were being sold singly near primary schools.[57] 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.[58] 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”.[58] 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.[59][60]

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;[61][62] exerting influence through third parties and trade committees;[63] and filing legal claims.[64][65]

To read more about the extent and frequency of tobacco industry tactics to undermine progress in Kenya, see:

TobaccoTactics Resources

== Notes ==
  1. 1.0 1.1 1.2 World Health Organization, Joint national capacity assessment on the implementation of effective tobacco control policies in Kenya, 2012, accessed September 2019
  2. 2.0 2.1 2.2 2.3 2.4 2.5 P. Patel, J. Collin, A.B. Gilmore. "The Law Was Actually Drafted by Us but the Government Is to Be Congratulated on Its Wise Actions": British American Tobacco and Public Policy in Kenya, Tobacco Control, 2007, 16(1):1–8, accessed September 2019
  3. D. Simpson, Kenya: Beach Party "Helps" Tobacco Bill, Tobacco Control, 2005, 14(1):4, accessed September 2019
  4. 4.0 4.1 Campaign for Tobacco Free Kids, New Survey Shows Need for Kenya to Take Strong Action to Save Lives from Tobacco Use, 2 December 2014, accessed September 2019
  5. Tobacco Control Unit, Ministry of Health Kenya, Global Adult Tobacco Survey 2014, available from World Health Organisation website, 2014, accessed September 2019
  6. Tobacco Control Unit, Ministry of Health Kenya, GYTS 2013 Kenya Fact Sheet, International Institute of Legislative Affairs website, 2013, accessed September 2019
  7. 7.0 7.1 7.2 7.3 7.4 Euromonitor International, Tobacco in Kenya, July 2018
  8. Kenya, Tobacco Atlas, undated, accessed September 2019
  9. 9.0 9.1 UN Food and Agriculture Organisation, FAOSTAT data on tobacco crops in Kenya, 2013-17, accessed September 2019
  10. Euromonitor International, Economies and Consumers Annual Data, 2013-2018
  11. International Institute of Legislative Affairs, Shadow Report on the Status of Implementation of the Framework Convention on Tobacco Control (FCTC) in Kenya (5 YEARS LATER), 2010, accessed September 2019
  12. A. B. Gilmore, G. Fooks, J. Drope, S. Aguinaga Bialous, R. R. Jackson, Exposing and addressing tobacco industry conduct in low-income and middle-income countries The Lancet, 2015, 385(9972):1029-1043, accessed September 2019
  13. P. Magati, R. Lencucha, Q. Li et al, Costs, contracts and the narrative of prosperity: an economic analysis of smallholder tobacco farming livelihoods in Kenya Tobacco Control, 2019;28:268-273, accessed September 2019
  14. 14.0 14.1 14.2 14.3 14.4 P. Magati, Q. Li, J. Drope, R. Lencucha, R. Labonté,The Economics of Tobacco Farming in Kenya, 2016, International Institute for Legislative Affairs and American Cancer Society, accessed September 2019
  15. R. Labonte, D. Makoka, J. Drope, R. Lencucha, Big Tobacco woos African Farmers with bogus promises of prosperity The Conversation, 1 January 2018, accessed September 2019
  16. Tobacco Farmers Will Have To Grow Trees Or Forget About The Crop, Kenya News Agency, 26 June 2019, accessed September 2019
  17. B. Matthes, M. Zatonski, Tobacco control and sustainable development: shared challenges and future opportunities, Journal of Health Inequalities, 2019, 5(1):71-79, accessed September 2019
  18. BATTransforming Tobacco: Sustainability Report 2018, BAT website, accessed September 2019
  19. 19.0 19.1 19.2 Euromonitor International, Company Shares – Kenya, 2018
  20. 20.0 20.1 20.2 20.3 Ministry of Public Health and Sanitation, International Institute for Legislative Affairs, Centre for Tobacco Control in Africa, Tobacco industry interference in Kenya: Exposing the tactics, January 2013, accessed September 2019
  21. P. Alushula, BAT forecasts 2019 exports revenue growth, Business Daily, 14 February 2019, accessed September 2019
  22. V. Juma, Mastermind billionaire in buyout talks with US firm, Business Daily, 25 January 2019, accessed September 2019
  23. G. Fayo, Mastermind land on sale in Sh2.9 deal with KRA, Business Daily, 28 February 2019, accessed September 2019
  24. A. Wako, Mastermind Tobacco tycoon dies, The Nation: Nairobi News, 6 June 2019, accessed September 2019
  25. J. Kamau, Ode to tycoon who almost smoked BAT out of business, Daily Nation, 9 June 2019, accessed September 2019
  26. British American Tobacco, Pricing and Tax, BAT Kenya website, undated, accessed September 2019
  27. 27.0 27.1 Tax Justice Network, Ashes to Ashes: How British American Tobacco Avoids Tax in Low and Middle Income Countries, 30 April 2019, accessed September 2019
  28. J. Owino, Cigarette manufacturer BAT on the spot for tax avoidance, Capital Business, 27 May 2019, accessed September 2019
  29. J. Muchangi, T. Kimani, Unify tobacco tax to boost revenue, Rotich advised, The Star, 26 June 2019, accessed September 2019
  30. 30.0 30.1 30.2 S. Bosely,Threats, bullying, lawsuits: tobacco industry's dirty war for the African market The Guardian, 12 July 2017, accessed September 2019
  31. British American Tobacco Investigated by Serious Fraud Office, BBC News, 2017, accessed September 2019
  32. British American Tobacco, Serious Fraud Office website, 2017, accessed September 2019
  33. WHO Framework Convention on Tobacco Control, The WHO Framework Convention on Tobacco Control: an overview, January 2015, accessed September 2019
  34. United Nations, Chapter IX: Health 4. WHO Framework Convention on Tobacco Control, UN Treaty Collection , as at 18 September 2019, accessed September 2019
  35. 35.0 35.1 The Government of Kenya, The Tobacco Control Act, 2007, accessed September 2019
  36. United Nations, Kenya, FCTC Implementation Database, as of 6 April 2018, accessed September 2019
  37. D. Simpson, Kenya: Beach Party "Helps" Tobacco Bill, Tobacco Control, 14.1 (2005): 4, accessed September 2019
  38. Kenya Suspends Smoking Ban, BBC News , 31 May 2006, accessed September 2019
  39. J. Tumwine, Implementation of the Framework Convention on Tobacco Control in Africa: Current Status of Legislation, Int J Environ Res Public Health, 2011 Nov; 8(11): 4312–4331, accessed November 2015
  40. Cabinet Secretary for Health Kenya, The Tobacco Control Act 2007, The Tobacco Control Regulations, 2014
  41. S. Chao-Blasto, Health minister defends strict tobacco rules in battle with manufacturer, Business Daily Africa, 3 August 2015, accessed November 2015
  42. Tobacco Free 254, KETCA, Tobacco Control Regulations, accessed November 2015
  43. C. Rwenji, BAT fails to stop enforcement of tobacco control rules, Standard Digital, 8 May 2015, accessed September 2019
  44. British American Tobacco Kenya, Petition no. 143 in the matter of the Tobacco Control Regulations 2014 between British American Tobacco Kenya Ltd and the Cabinet Secretary for the Ministry of Health, 14 April 2015
  45. C. Maina, BAT challenges new cigarette regulations on packaging from Ministry of Health, The Star,16 April 2015, accessed September 2019
  46. British American Tobacco Kenya, Petition no. 143 in the matter of the Tobacco Control Regulations 2014 between British American Tobacco Kenya Ltd and the Cabinet Secretary for the Ministry of Health, High Court ruling of 24 March 2016
  47. 47.0 47.1 Office of the Attorney General and Department of Justice, Kenya, Government wins Tobacco War in Protecting Public Health, Press Release, 18 February 20017, accessed September 2019
  48. British American Tobacco Kenya Limited v Cabinet Secretary for the Ministry of Health, Tobacco Control Board & Attorney General, Civil Appeal (Application) Nai 112 of 2016, Application to the Court of Appeal, 16 September 2016
  49. British American Tobacco Ltd v. Ministry of Health, et al, Civil Appeal No. 112 of 2016, Court of Appeal ruling of 17 February 2017
  50. M. Njugunah, Anti-tobacco lobby welcomes favourable court ruling on cigarette pack branding Capital FM Business, 20 February 2017, accessed September 2019
  51. Court of Appeal of Kenya rejects BAT challenge to Tobacco Control Regulations, McCabe Centre for Law & Cancer, 6 April 2016, accessed September 2019
  52. G. Bocha, Supreme Court asked to throw out smoking rules The Nation, 27 April 2018, accessed September 2019
  53. A. Wako, Pain for revellers as Rotich hits alcohol, cigarettes with higher taxes, The Nation: Nairobi News, 13 June 2019, accessed August 2019
  54. M. Omusulu, BAT faults treasury’s tax measures, Standard Digital”, 20 July 2019. Accessed August 2019
  55. J. Owino, BAT set to launch smoke-free cigarettes in Kenya, Capital Business, 19 July 2019, accessed August 2019
  56. S. Bosely, tobacco continued to be easily accessible to children Inside the murky world of Nairobi’s smoking zones The Guardian, 12 July 2017, accessed September 2019
  57. Institute for Global Tobacco Control, Technical Report on Tobacco Marketing at the Point-of-Sale in Nairobi, Kenya: Product Display, Advertising, and Promotion around Schools, Johns Hopkins Bloomberg School of Public Health, November 2016
  58. 58.0 58.1 Nairobi Assembly: Bills, Nairobi Assembly website, accessed February 2019
  59. Bills, Nairobi Assembly court record, accessed August 2019
  60. Proposed bill to ban sale of cigarettes in universities, The Star, 6 April 2019, accessed September 2019
  61. Chief of Staff and Head of Public Service, Letter to Cabinet Secretary of the Ministry of Health, New Tobacco Regulations, 3 February 2015
  62. Director of Public Health, Ministry of Health, Kenya Tobacco Control Regulations 2014 – potential impacts on East African Community (EAC) principles and obligations, 27 January 2015
  63. BL. Kaleve, Chairman, National TBT Consultative Committee, Invitation to attend TBT workshop in Naivasha on 13th -14th March 2012, 2 March 2012
  64. British American Tobacco Kenya, Petition no. 143 in the matter of the Tobacco Control Regulations 2014 between British American Tobacco Kenya Ltd and the Cabinet Secretary for the Ministry of Health, 14 April 2015
  65. C. Maina, BAT challenges new cigarette regulations on packaging from Ministry of Health, 16 April 2015, accessed September 2019