Jump to full article: Business Daily Africa (The Nation) (ke), 2008-08-04
Author: Written by Washington Gikunju
Intro: The debate over the control of the consumption of tobacco and alcohol have over the years been shaped by moral and religious convictions, which have over the last two decades attracted government intervention because of rising public health costs and deaths associated with these products around the world.
The Health ministry has been waging this battle for over a decade by shackling the ability of cigarette firms to make smoking attractive through marketing.
The next shape that this fight has taken with the Tobacco Control Act 2007 is attempting an even ambitious use of economic sanctions (in terms of stiff fines and controlling production promotion and availability) to regulate consumer behaviour and morals by attaching a negative social sting to public smoking.
According to experts, the harsh economic disincentives placed on public smoking and cigarette consumption through high taxes, court fines and jail fines could force a sizeable portion of the population to trade down from legitimate products sold by BAT Kenya and Mastermind to cheaper traditional alternatives and illicit products obtained through smuggling and other forms of tax evasion.
This will produce a big underground movement of smokers who fall below the radar of the ministry of health, but who continue to increase the public healthcare bill. . . .
"We believe the tobacco industry in Kenya is in the stabilization and decline stage of the industry life cycle," says an African Alliance analysis report dated July 22, after BAT released its half-year results up to June this year. "This is evidenced by declining profit margins, decelerating growth in domestic consumption." . . .
Overall, the company is positive about the new legislation and it plans to use it to steal more business from illicit trade. "We see this as a reasonable piece of legislation if it is implemented in an orderly manner. As a company we support regulation of the Industry as it provides a level playing field for all players," says Mr Gretton.
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