Kenya: More Kenyans may find it cheaper to buy beer in Tanzania and Uganda

More Kenyans living in border points may find it pocket-friendly to cross into Tanzania and Uganda for a beer after the two countries slashed the price of excise stamps, one of the cost components of the beverage, The East African reported on February 25.

Tanzania last month lowered the excise stamps affixed on excisable goods including beer and spirits, pushing down the cost of producing a tipple.

This is the second time Tanzania has lowered the price of excise stamps, even as Kenya plans to double the price in what is aimed at helping the Kenya Revenue Authority (KRA) offset a Ksh4.5 billion ($30.72 million) the taxman owes Siscpa, the Swiss company contracted to manufacture the stamps.

On February 5, 2024, the Tanzania Revenue Authority (TRA) published new lower electronic tax stamp prices.

“In accordance with Regulation 6(2) of the Electronic Tax Stamps Regulation, 2018 the Commissioner-General of Tanzania Revenue Authority wishes to announce new prices (fees) for tax stamps following the successful completion of negotiations involving TRA, Confederation of Tanzania Industries and the vendor Siscpa SA,” reads the notice signed by TRA Commissioner-General Alphayo Kidata.

“Manufacturers, producers, and importers of excisable goods listed in the First Schedule of the Electronic Tax Stamps Regulation 2018 shall purchase stamps from the vendor (M/s Siscpa Tanzania Ltd) at the prices attached.”

Kenyan manufacturers, just like their peers in Tanzania and Uganda, had expected the cost of the stamps to drop by more than half, according to a fresh contract the KRA signed with Siscpa.

Since 2021, the price of beer in Tanzania and Uganda has become relatively cheaper, compared with Kenya, after the governments of the two countries reviewed the price of excise stamps on beer bottles.

Kenya plans to increase the price of stamps affixed on bottles and double it to Ksh3 ($0.02).

Tanzania, which reduced the price of excise stamps in 2021, lowered it further, effective January this year contributing to lower prices of beer in the region’s second-largest economy.

For locally made beer, the price of stamps has dropped from Ksh1.05 ($0.0072) to 85 cents ($0.0058).

For imported beer, the stamp price dropped from Ksh1.32 ($0.0089) to Ksh1.02 ($0.0070), helping ease the pressure on the bottom line of alcohol manufacturers such as East African Breweries Ltd (EABL) which has operations in Tanzania, Uganda, and Kenya.

The cost of a stamp affixed on a beer bottle will double to Sh3, while those for spirits, wines, and tobacco products are set for a 79 percent rise to Ksh5 ($0.034) from Ksh2.80 ($0.019) per stamp.

Uganda has also reduced the cost of excise stamps, inclusive of value-added tax, from Kshh2.43 to Ksh1.59.

But it is not just the cost of stamps that pushes up the price of beer in Kenya relative to its EAC peers. Kenya has also hit imported bottles with a 35 percent excise duty and introduced a new excise duty on advertisements done by alcoholic companies pushing up the beer in Kenya compared to that in the region.

Because people — as well as goods — are free to move within the EAC, Kenyans keen to get high on low-cost budgets have always made pilgrimages to the neighbouring countries, especially the border towns. And, over the years, alcoholic drinks have become a cash cow for a government keen on bridging a yawning budget deficit.

A study by the Kenya Institute for Public Policy Research and Analysis a state corporation based at the National Treasury, showed that beer sales as a fraction of private final consumption had risen sharply between 2000 and 2012 before numbers started going down.

Beer consumption as a percentage of private final consumption rose sharply from 2 percent in 2000 to a peak of 4 percent in 2008.

Thereafter, it dropped to 3 percent in 2009, perhaps due to the post-election violence of 2008 which had a major impact on the economy.

Private consumption includes all purchases made by consumers, such as food, housing (rents), energy, clothing, health, leisure, education, communication, transport and hospitality industry services.

26 February, 2024