A new study has revealed that the illicit cigarette trade is growing rapidly across East Africa, with Uganda and Kenya suffering major revenue losses due to increased smuggling.
The research, conducted by international firm Kantar, highlights a significant increase in cigarette smuggling from Uganda into Kenya. This cross-border illicit trade is contributing to widespread tax evasion in both countries.
According to the study, 34% of cigarettes sold in Uganda by the end of 2024 were classified as illicit—an increase of five percentage points in just two years. This is estimated to cost the Ugandan government approximately UShs 30 billion annually in lost tax revenue.
“This is a deeply concerning trend, with significant economic losses and growing threats from international criminal networks undermining Uganda’s business environment and its citizens’ livelihoods,” said Arthur Bagenze, Country Manager for BAT Uganda.
“Illicit trade not only erodes the revenues of legitimate businesses but also threatens the jobs of thousands of Ugandans across the value chain. Tax evasion further denies the government critical funds needed for investment in essential public services such as education and infrastructure,” he noted. Adding that “While local authorities have made efforts to address this challenge, the latest research clearly shows the urgent need for stronger collaboration between Uganda and Kenya. I urge both governments to take decisive action—particularly by tightening border controls in areas most affected by smuggling. There’s also a pressing need to strengthen and enforce anti-illicit trade laws, adapt them to the changing methods of smugglers, and impose stricter penalties to deter criminal activity.”
The study also reported a sharp rise in Kenya’s illicit cigarette market, which has grown from 28% last year to an unprecedented 37% today.
Bagenze added; “Addressing illicit trade will require a coordinated, multi-stakeholder effort. Business leaders, policymakers, and law enforcement agencies in both Uganda and Kenya must work together to combat this growing problem.”
He emphasized that “It’s critical to close the loopholes that allow cross-border smuggling and establish a stronger regulatory framework to protect market integrity and the public interest. Together, Uganda and Kenya can dismantle the networks behind this illegal trade and build a fair and compliant market for everyone.”
