British American Tobacco (BAT) Kenya says unfavourable regulations could see it scale down its local cigarette manufacturing in what will lead to job losses.
The Nairobi Securities Exchange-listed firm’s Nairobi factory produces cigarettes and semi-processed tobacco for the local market and exports to 13 countries in the region.
BAT says increased regulatory uncertainty in the local market and trade barriers in the region now threaten the plant’s international manufacturing hub status.
“Over the years, we have worked hard at BAT Kenya to ensure that we remain a strategic manufacturing hub for our international group. This has been a significant achievement considering that there are only two other such hubs in Africa,” the company said in its latest annual report.
“We cannot take this status for granted. We are competing with other factories in BAT and to maintain our importance within the group we need a strong domestic market, regulatory predictability and help from government especially in dismantling trade barriers in the region.”
The company’s parent firm, UK-based BAT Group, has a total of four manufacturing locations in Africa, including South Africa and Nigeria. The multinational also acquired Sudan’s Blue Nile Cigarette Company in 2015.
The conglomerate has a total of 44 cigarette factories worldwide and says it is currently focusing on improving the efficiency of its supply chains.
BAT Kenya says the government should pay attention to old manufacturers even as it courts new players in its industrialization drive.
The company paid a record Sh19.2 billion in taxes to the government last year. BAT opposed the Tobacco Control Regulations which require manufacturers to contribute a percentage of their profit to mitigate the adverse effects of tobacco use and to publish graphic images on packaging to warn the public of the harmful effects.
The government recently offered some reprieve to the industry with the tax on cigarette without filters set to drop from the current rate of Sh2,500 per mille to Sh1,800 per mille.
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Credit: Business Daily