Uganda losing sh30b annually to illicit cigarette trade – study

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Uganda is losing an estimated sh30 billion every year due to the illicit trade in cigarettes, a new study has revealed.

The study, conducted by Kantar, an international research firm, highlights a growing trend of cigarette smuggling across East Africa, with Uganda and Kenya suffering the brunt of the trade.

According to the findings, 34% of cigarettes sold in Uganda by the end of 2024 were illicit, marking a five-percentage-point rise in just two years.

This illicit trade is driven largely by smuggling between Uganda and Kenya, with Uganda now identified as a key source of contraband cigarettes entering the Kenyan market. The Kenyan market itself has seen a sharp increase in illicit cigarette sales, rising from 28% to 37% within a year.

Commenting on the findings, BAT Uganda Country Manager Arthur Bagenze described the situation as “troubling,” warning that the country faces both economic losses and increased threats from international criminal networks.

BAT Uganda Country Manager Arthur Bagenze. (BAT photo)

“Illicit trade undermines legitimate business revenues and the livelihoods of thousands of Ugandans. It also robs the government of much-needed revenue that could support essential public services such as education and infrastructure,” Bagenze said.

He urged authorities in Uganda and Kenya to intensify border controls, enforce anti-smuggling laws more rigorously, and introduce stricter punitive measures.

“This research underscores the urgent need for bilateral cooperation. Both governments must act decisively to close the gaps that allow cross-border smuggling to flourish,” he added.

BAT Uganda, which has been operating in the country since 1928 and is listed on the Uganda Securities Exchange, partners with over 30,000 businesses and is one of the country’s top taxpayers. The company was also recognised in 2023 by the Uganda Revenue Authority as an Authorised Economic Operator for tax compliance.

Bagenze warned that unless immediate collaborative action is taken, the integrity of the local market will continue to erode, hurting both public interests and the economy.

“Together, Uganda and Kenya can dismantle the networks driving this illicit trade and secure a compliant and fair market for all,” he said.