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Daily Nation : February 9th 2014
SUNDAY NATION February 9, 2014 National News 5 reintroduced in December in an effort to check a rising number of road accidents say bar owners Alcohol sales boost Treasury as the number of drinkers rise BY KENFREY KIBERENGE email@example.com Kenya’s alcohol industry is a multi-billion-shilling sector where millions of litres of beer, wines and spirits are drowned annually. Estimates by the Deutsch Bank Market Research indicate that the government gets at least five per cent of its total revenue from taxing alcoholic drinks. In the 2012/2013 financial year, Kenya Revenue Authority (KRA) collected at least Sh800.5 billion, meaning an estimated Sh40 billion was raised from the brewers, going by Deutsch Bank’s estimates. According to the Economic Survey 2013, government revenue from beer, wines and spirits (alcohol industry) was Sh18.957 billion in 2012 though it is not clear how this was arrived at. The government has been slap- ping the “sin tax” on beer and cigarettes each time it wants to plug a hole in the budget. The taxman charges excise tax on FILE | NATION for bribes to let drunk drivers off the hook. In some cases, the Traffic Act provides for fines of up to Sh500,000 for offending motorists while those caught driving under the influence can be fined a maximum of Sh100,000. “All motorists convicted of drunk driving have been fined Sh20,000 so the police, who used to ask for Sh500, cannot take anything below Sh10,000,” said a disgruntled driver. But Mr Kinyanjui denies the assertion, saying police have even arrested wealthy Kenyans who have been subjected to the full judicial process. “We have arrested very senior and wealthy Kenyans and if it was about the money, they would not have been taken to court,” he says. Mr Gitonga claims the breakdowns used to tow vehicles of arrested motorists belong to police officers. “Over and above the Sh20,000 fine in court, you are forced to pay Sh10,000 for the breakdown service,” he said. But Traffic Commandant Samuel Kimaru dismissed the claims, saying an internal investigation had established the breakdowns are not owned by policemen. “We have to secure your car and the law allows us to tow it to the nearest police station at your cost,” said Mr Kimaru. “I have directed all the stations to benchmark the towing rates with those of AA Kenya to safeguard motorists from being exploited.” Police officers administer an alcohol test on a motorist on Mombasa Road near Athi River on Friday night. all beers at the rate of Sh75 per litre, which has been increased every financial year. Imported alcohol also attracts import duty. Keg was previously exempt from excise duty to cater for the low-end market but now attracts tax at the rate of Sh35 per litre while spirits are charged at Sh120 per litre and wine at Sh80 per litre. With the keg commanding 15.3 per cent of the beer market by volume in 2011, National Treasury Cabinet Secretary Henry Rotich said the government would raise Sh6.2 billion annually from the excise tax. KRA estimates that excise duty on If I plan to drink and engage the services of a taxi driver, is that not a new opportunity,” National Transport and Safety Authority chairman Lee Kinyanjui beer contributes to more than half of the total excise duty collection. By 2012, the taxman had licensed 38 alcoholic beverage manufacturers in the local market. The big money involved in the sector has been underlined by the fact that East African Breweries Limited (EABL), the market leader, has been continuously ranked as the second largest taxpayer after Safaricom. The government, however, does not reveal how much taxes it gets from the brewery, which commands between 80 and 90 per cent of the legal alcohol industry. But the firm announced it made a net profit of Sh6.9 billion for the year ended June 2013. Its profit before tax stood at Sh11 billion. Overall, the Ruaraka-based brewing giant made net sales worth Sh59 billion in 2013, up from Sh55 billion the previous year, further highlighting the big money in the industry. The emerging middle class has touched off a determined scramble for the Kenyan market with Keroche, SAB Miller, Heineken, among others other alcohol makers, seeking to grab a share from EABL. But even the new players are warning of an alarming proliferation of illicit liquor that needs to be resolved urgently. “Non-commercial/illicit alcohol creates a serious health risk and leads to unfair competition,” said Responsible Alcohol Drinks Companies Association (Radca), which consists of Heineken, SAB miller, Ozbecco Breweries, Pernod Ricard and Keroche. Economist X.N. Iraki says the illicit brews ought to be regulated properly. “Illicit brewing should be formalised so that its negative consequences like death and disease can be reduced. Uganda has Waragi, Tanzania has Konyagi and Scotland has all its brews,” he says. SAB Miller intends to splash a war-chest of up to Sh42.5 billion ($500 million) a year outside South Africa and open one to two new breweries in Africa in each of the next three years. It is not clear if Nairobi, which has become a favourite city for regional headquarters, will be selected although the company already has an office in Ruiru. Heineken, Europe’s largest brewer, also opened a regional office in Nairobi last March to support operations in Kenya, Tanzania and Uganda, including an export unit supplying several other countries in the region. But it is not hard to know why Kenya is becoming a hit with beer makers. The Deutsch Bank’s report shows that Kenyans guzzle 17 per cent of the total beer consumed in Africa, placing the country third in the continent after Nigeria (36 per cent) and South Africa (18 per cent). The National Authority for the Campaign Against Alcohol And Drug Abuse (Nacada) chairman John Mututho recently also sent tongues wagging by claiming that Kenyans consume 75 per cent of the total beer sold in East Africa, including Ethiopia and Sudan. The bank’s report puts Kenya slightly ahead of the pack, saying 490 million litres of beer were consumed in 2012 compared to 410 million and 340 million in Tanzania and Uganda respectively. Beer consumption in the country has increased from 4.1 litres per person in 2006 to about 9.2 litres in 2006 and 11.9 litres in 2012. Experts expect that by 2016, the consumption will have exceeded 14 litres per person. The global average is 35 litres per person. The figures exclude spirits and wines as well as the traditional and illicit brews. While the formal brews account for 54 per cent of the beer market in Kenya, the illicit brews account for the remaining 46 per cent. A 2011 World Health Organisa- tion (WHO) report estimates that 44 per cent of alcohol consumers in the country prefer beers, 27 per cent go for spirits and one per cent partake of wine. WHO says 28 per cent consume “others” assumed to be the illicit and traditional beers. The latest report by Nacada in- dicates that 2.72 million (13.5 per cent) Kenyans aged between 15 and 65 drink alcohol. Of these, 1.1 million are said to depend on alcohol, meaning they are addicted. More men (21.2 per cent) than women (5.9 per cent) are using alcohol. The report shows that Kenyans between the age of 25 and 35 drink more alcohol (17.6 per cent) than those in the 18-24 bracket (10.2 per cent) and age 36 to 65 (13.6 per cent). Why owning a car is fast becoming a liability in Nairobi BY KENFREY KIBERENGE For a long time, owning a car has been every Kenyan’s dream. After all, the vehicles bring comfort and convenience. But for Nairobi motorists, owning one is increasingly proving to be a liability. First, motorists have to contend with traffic snarl-ups in the morning and evening, in which cars consume more fuel. A 2012 study by IBM Corporation, a multinational technology and consulting company, estimated that the country loses close to Sh50 million a day due to traffic congestion in the city and its environs. The roads have become more con- gested as the number of vehicles on the roads grows steadily. Motoring expert Gavin Bennett estimates that 1,000 cars are entering Kenyan roads every week. But the nightmare pervades even after you make it to the city centre: finding parking space. Many motorists make several laps before finding a slot, for which they are forced to part with a few coins to the parking boys. As you leave, the parking boys and guards expect some money for providing security to your car. Many who fail to cooperate find their cars vandalised. Hurrying motorists are often forced to leave their cars with the parking boys or security guards to find a parking space. And when they find one, they quickly sell it to another motorist and continue burning your fuel in more laps. Motorists also have to dig deeper into their pockets since the Nairobi County last week increased the parking fee from Sh140 to Sh300. That is not all. If you plan to drive home, you cannot enjoy a drink at your favourite bar like before: you risk a fine of up to Sh100,000 or a year in jail after the government introduced Alcoblow in December to check drunk driving. On top of that, your car will be towed to the police station and you have to pay Sh10,000 for breakdown services. Nairobi motorists, it seems, are under siege!
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