Nairobi County: Demands Sh924M for EABL Liquor License Arrears

• Nairobi City County is demanding Sh924 million from East African Breweries Limited for alleged liquor licensing arrears.
• The claim stems from an internal audit revealing disparities in licensing contributions and revenue gaps.
• The county asserts liquor licensing is a devolved function under the Kenyan Constitution, dismissing "double taxation" arguments.
• Negotiations between the county and EABL to resolve the matter have been unsuccessful.
• The Alcoholic Beverage Association of Kenya (ABAK) has obtained court orders restraining the county's enforcement actions.

The outcome of this specific litigation between Nairobi County and ABAK/EABL will be crucial for understanding potential compliance exposures and legal defenses for other beverage manufacturers operating in Kenya.

Nairobi City County is actively pursuing East African Breweries Limited (EABL) for a substantial sum of approximately Sh924 million, representing alleged outstanding liquor licensing arrears. This significant demand follows a comprehensive internal audit conducted by the county, which brought to light long-standing discrepancies in revenue collection and perceived inequalities within the existing liquor licensing framework. Lydia Mathia, the Chief Officer for Business and Hustlers Opportunities, confirmed the county's position, stating that the assessment is based on provisions outlined in the Nairobi City County Alcoholic Drinks Control and Licensing Act, 2014, and the Finance Act, 2026.

Despite efforts by county officials to engage EABL in discussions, including extending an "olive branch" for resolution, negotiations have not yielded a satisfactory outcome. A central point of contention in this dispute is the stark contrast identified by Mathia between EABL's historical contributions to Nairobi County's licensing fees, which have reportedly been around Sh1 million, and the significantly higher fees, sometimes reaching Sh9 million, paid by other major beverage manufacturers operating in adjacent counties. This disparity, according to Mathia, raises critical questions regarding whether current licensing arrangements adequately reflect the operational scale and market penetration of manufacturers within the capital city.

The county government has firmly rejected arguments from industry representatives suggesting that payments of excise duty and corporate income tax to the Kenya Revenue Authority (KRA) should either exempt manufacturers from or reduce their obligations for county-level licensing. Mathia underscored that national taxation and county liquor licensing serve distinct purposes, with the latter falling squarely within the devolved functions of county governments. She cited the Fourth Schedule of the Constitution of Kenya (2010), Part 2, Paragraph 4(c), which explicitly grants county governments the mandate for liquor licensing, asserting that this constitutional provision must be upheld.

Mathia further characterized the situation as a "decades-long corporate free ride," emphasizing the county's commitment to protecting public revenue. She argued that it is inequitable for smaller establishments, such as neighborhood bars, restaurants, and wines and spirits outlets, to face rigorous enforcement of licensing requirements while the obligations of major manufacturers remain unresolved. The county's enforcement strategy is driven by the imperative to ensure that all businesses contribute fairly to the funding of essential public services, including healthcare, water provision, and road infrastructure, which directly benefit Nairobi residents.

The ongoing dispute has also drawn in the Alcoholic Beverage Association of Kenya (ABAK), which engaged county officials in a meeting on October 14, 2026, to discuss the broader licensing framework. Following these discussions, ABAK subsequently secured court orders that temporarily restrain the implementation of the contested measures. Nairobi County has publicly affirmed its respect for the judicial process and has committed to complying with all active court orders while it vigorously defends its position through legal channels.

The county maintains that its objective is to recover only what is legally due, ensuring that all licensing assessments are conducted fairly, transparently, and in strict adherence to the law. This assertive stance by Nairobi County in pursuing the Sh924 million demand from EABL, coupled with its dismissal of "double taxation" claims, signals a potentially significant shift in how devolved administrations may approach revenue collection from large corporations. The outcome of this specific litigation between Nairobi County and ABAK/EABL will be crucial for understanding potential compliance exposures and legal defenses for other beverage manufacturers operating in Kenya.

Lawyers and compliance officers advising beverage manufacturers in Kenya should review their clients' historical liquor licensing compliance with Nairobi County and other devolved administrations. This dispute highlights the county's assertive stance on its devolved mandate for revenue collection, rejecting 'double taxation' arguments, and could set a precedent for future audits and demands for arrears from other businesses. Monitoring the outcome of the ongoing litigation between Nairobi County and ABAK/EABL is crucial for understanding potential compliance exposures and legal defenses.

Source: Original reporting via local Kenyan news sources.