Kenya: BAT Sees Tough Times Ahead Over New Laws

Source from:  The Star (Nairobi) 05/07/2015

CIGARETTE manufacturer British American Tobacco has predicted a difficult business environment in Kenya, with major concerns over the Tobacco Control Regulations 2014.

During its annual general meeting yesterday, BAT management said the new laws will negatively impact the tobacco industry, which is among top tax payers.

"Looking at 2015, we have a couple of things that have given some light on the environment. Some of it is the regulatory landscape. We are also going to look at what the budget will look like in June this year," said BAT finance director Philip Lopokoiyit.

In 2014, BAT paid Sh15.4 billion in taxes.

BAT managing director Chris Burrell said the new regulations have major flaws and are not compatible with the parent Act - the Tobacco Control Act 2007.

"Technically, we believe that some of the provisions are unconstitutional," said Burrell.

Burrell warned that no tobacco manufacturer will be able to comply with the implementation of the pictorial health warnings, since they (manufacturers) have not been given the graphics, hence not aware of what exactly is required.

He said the company has submitted its complaints to a parliamentary committee on the legislation and raised concerns with the trade, industrialisation, agriculture ministries and the attorney general.

"No manufacturer has received the art work or technical specifications on the new health warnings. For that reason, neither BAT nor any other company in Kenya is capable of meeting the implementation deadline of June 5," said Burrell.

The company said it however expects to record good earnings in DRC and Uganda.

The Tobacco law which will be enforced from June also bans cigarette makers from printing trademarks and brand names on packets, a provision that could make it difficult for consumers to identify their preferred brands.

Manufacturers are also required to ensure that health warnings are printed front and back of the cigarette packets covering at least 50 per cent of the packaging, front and back. The health warnings are to be printed in both English and Swahili.

The cigarette packets will also contain a batch number to determine the place, manufacturing date and country of origin.