Kenyan Retailers: Demand Stronger Illicit Trade Enforcement

• Kenyan retailers are urging the government to shift its focus from retail-level seizures to investigating upstream networks behind illicit trade.
• The Retail Trade Association of Kenya (RETRAK) proposes five key interventions, including intelligence-led enforcement and supply chain investigations.
• The Pubs, Entertainment and Restaurants Association of Kenya (PERAK) calls for stronger implementation of existing laws and a multi-agency forum.
• Illicit cigarettes are projected to account for 45% of Kenya's market by 2025, leading to Sh10.2 billion in annual revenue losses.
• Illicit alcohol represented approximately 59% of consumption in Kenya in 2022, with an estimated economic cost of Sh71 billion.

RETRAK is advocating for a significant reorientation of government enforcement strategies, urging agencies to move beyond merely seizing illegal products at retail points and instead focus on comprehensive investigations into the manufacturers, importers, distributors, and financiers who supply these illicit goods.

Kenyan retailers are sounding the alarm over the pervasive growth of illicit trade, which they contend is severely undermining legitimate businesses across the country. The Retail Trade Association of Kenya (RETRAK) has highlighted that the increasing presence of counterfeit and untaxed products in the market creates an unfair competitive landscape, jeopardizing jobs and exposing consumers to potentially unsafe goods. This illicit activity has permeated various sectors, extending beyond traditional hidden markets to everyday commerce, impacting products such as cigarettes, alcoholic beverages, sugar, cosmetics, clothing, motor vehicle spare parts, and even pharmaceutical products.

Wambui Wamwiri, Chief Executive of RETRAK, emphasized that compliant businesses are losing customers to traders who offer cheaper alternatives by circumventing tax and regulatory obligations. The consequences of this illicit trade are far-reaching, impacting not only government revenue but also the viability of legitimate enterprises and the safety of the public. The association stresses that the problem is no longer an isolated issue but a deeply embedded challenge within the national economy.

In response to this growing crisis, RETRAK is advocating for a significant reorientation of government enforcement strategies. The association urges agencies to move beyond merely seizing illegal products at retail points and instead focus on comprehensive investigations into the manufacturers, importers, distributors, and financiers who supply these illicit goods. RETRAK proposes five key interventions: intelligence-led enforcement, robust investigations across entire supply chains, the implementation of product authentication systems for retailers, enhanced public-private sector collaboration, and transparent reporting of enforcement outcomes to ensure accountability.

Existing interventions, such as seizures and destruction operations carried out by entities like the Kenya Revenue Authority (KRA), the Kenya Anti-Counterfeit Authority (ACA), the National Police Service, and the Kenya Bureau of Standards (KEBS), are seen as necessary but insufficient. RETRAK argues these efforts must be complemented by targeted investigations aimed at dismantling the underlying networks. Furthermore, the association seeks to empower retailers with accessible systems for verifying excise stamps, product authentication marks, and supplier documentation, while simultaneously reinforcing their responsibility to reject goods whose origins cannot be definitively established.

The economic impact of illicit trade in Kenya is substantial, as evidenced by recent market analyses. A study conducted by research firm Kantar, commissioned by British American Tobacco Kenya, projected that illicit cigarettes would constitute 45 percent of the country's cigarette market by 2025, a notable increase from 34 percent in 2021. This surge is estimated to result in annual excise duty and VAT revenue losses totaling Sh10.2 billion. Separately, data presented to Parliament by the Anti-Counterfeit Authority revealed that illicit alcohol accounts for approximately 59 percent of all alcohol consumed in Kenya, incurring an estimated economic cost of Sh71 billion in 2022.

Michael Muthami, National Chairman of the Pubs, Entertainment and Restaurants Association of Kenya (PERAK), emphasized that the country's primary need is not for new legislation but for more rigorous implementation of existing laws. Muthami expressed skepticism regarding whether the proposed Alcoholic Drinks and Drugs Control Laws (Amendment) Bill, 2026, including raising the legal drinking age from 18 to 21, would effectively curb illicit alcohol trade Kenya. He called for a national multi-agency forum, bringing together government bodies, manufacturers, distributors, and retailers, to collaboratively address issues such as smuggling, corruption, and weaknesses in border enforcement. Muthami warned that legitimate businesses face the risk of closure if enforcement remains weak while additional licensing and regulatory burdens continue to escalate operating costs.

Lawyers and compliance officers should advise clients, particularly manufacturers, importers, and distributors in affected sectors, to review their supply chain due diligence and compliance frameworks. Increased government scrutiny and enforcement efforts are shifting from retailers to upstream networks, necessitating proactive measures to mitigate exposure to illicit trade activities and potential investigations.

Source: Original reporting via Cap