KAMPALA – British American Tobacco Uganda Limited (BAT Uganda), a company that grows and processes tobacco in Uganda and sells cigarettes and other tobacco products to the local market and for export has donated Hammermill – a cigarette destruction machine to the Uganda Revenue Authority (URA) in efforts to support the national fight against illicit trade in cigarettes.
The acquisition of a mobile cigarette destruction machine will be used to destroy illegal cigarettes seized by the Customs Enforcement team of URA.
Receiving the machine at URA head offices in Nakawa, Dr. Okaka Godfrey – Acting Commissioner Customs said that the Hammermill will provide a more convenient and cost-efficient way to destroy illicit cigarettes compared with to manual methods.
“The process of destroying seized cigarettes has always been handy. On March 18, 2022, we had cigarette destruction in Nakasongola and we incurred a lot of costs of approximately shs100m. Now with this facility, we can easily take on the exercise,” he said.
The acquisition of the machine follows a 3rd party research report by Kantar, commissioned by BAT Uganda, which revealed that 27.5% of the cigarettes sold in Uganda are illicit. Additionally, 56% of these illicit cigarettes are manufactured in Uganda for export, with the rest being manufactured in other countries before being smuggled into the country.
In 2021, BAT recorded a 41% drop in its tax remittances to URA, from UGX 82.76 billion in 2020 to UGX 48.64 billion, largely driven by the impact of illicit trade in cigarettes to business revenues. It is estimated that the government loses approximately UGX 30 billion annually to the Illicit trade in tax evaded cigarettes.
Dr. Okaka noted that smuggling is detrimental to fair trade because it reduces government revenue and puts a strain on compliancy businesses that are unable to sell their products because the market is stranded with smuggled goods.
He revealed that between 2019 to 2022, the URA enforcement teams in Kampala, Elegu, Arua, Madi Opei, Pakwach, Corner Kamdini and other remote stations relying on the intelligence-led focused operations model seized more than 293,099 cartons of illicit cigarettes valued at USD 340,000 or UGX 1,219,920,000.
“The major brand intercepted was Super match made in Uganda for export contributing to more than 90% of the seized cigarettes. Others include high end brands like Oris, Dunhill, Business Royal, Sportsman.”
He commended BAT Uganda for its continued contribution and commitment in combating cigarette smuggling in Uganda, something he says is a demonstration of developing Uganda.
He said that URA maintains a stance of non-tolerance to smuggling by regularly carrying out sweeping and intelligence-led operations to curtail the vice.
“In addition, Uganda Revenue Authority has adopted a purposive initiative to combat illicit cigarette trade by collaborating with legitimate industry players like BAT to protect the Ugandan market, to which end the hammermill has been donated to support with destruction of seized illicit cigarettes.”
BAT Uganda’s Managing Director, Mathu Kiunjuri noted that Illicit trade is a serious issue that the tobacco industry has grappled with for many years. This year’s illicit cigarette trade incidence of 27.5% is a spike from 23.8% in 2021 which was an increase of 54.5% compared to September 2020 when the number stood at 15.4%. The biggest concern for our industry relates to tax-evaded cigarettes bearing fake tax stamps or no tax stamps at all.
These products also do not bear the prescribed graphic health warnings on their packaging, in contravention with the Tobacco Control Regulations, 2019 (TCR). We wish to reiterate our commitment to work transparently with the relevant authorities to combat illicit cigarette trade. Therefore, the opportunity to donate the Hammermill to Uganda Revenue Authority to aid with enforcement against illicit cigarette trade is an honour for us and testament to this commitment.
Mr. Thadeus Musoke Nagenda – Chairman KACITA Uganda warned all business players to follow all the procedures to avoid making losses whenever their goods are intercepted.
“We decided to strengthen our partnership with different government agencies because of the agency in streamlining the business. As leaders, we have to do a lot because we have a strategy with URA to improve compliance which we thought is very important to improve the business community.”
“We are having several sensitization drives which we think if fully implemented, we can avoid illicit trade because whenever goods are intercepted, there is a lot of loss,” he noted.