BAT Kenya Unveils Ksh. 2.5 Billion Tobacco-Free Oral Nicotine Factory

The British American Tobacco Kenya plc (BAT Kenya) recently held it’s 68th Annual General Meeting (AGM) and unveiled a new tobacco-free nicotine factory worth 2.5 billion shillings.

The factory is on track to open in Q3 2020 and will be a first of its kind in Africa, serving as a potential export hub for EAC partner states and beyond.

During the BAT AGM, which was held electronically owing to COVID-19 Government restrictions on public gatherings, shareholders ratified a final dividend of 30.00 shillings, bringing the total dividend for 2019 to 33.50 shillings per share.

“Despite the COVID-19 pandemic, which has presented unique and unprecedented challenges for many businesses in Kenya, we are pushing forward with our planned investment so that we can help contribute to the country’s economic recovery, and signal to the world that Kenya is open for business,” BAT Kenya’s Managing Director, Beverley Spencer-Obatoyinbo.

“Our new oral nicotine manufacturing is testament to our commitment to the Government’s manufacturing agenda and is on track for launch in Q3 2020,” Spencer-Obatoyinbo added.

“With Kenya becoming a global innovation hub, the BAT Group-backed our vision to make Kenya the recipient of the 2.5 billion shillings investment in an oral nicotine factory,” Spencer-Obatoyinbo.

It was a very competitive process, with other BAT Group companies putting forward their own business cases and seeking similar investments.

“This factory will increase our manufacturing and exports footprint, create more jobs, and meet the needs of Kenyan consumers for greater choice, more innovation and less risk. Despite this investment and strong business performance, BAT Kenya remains concerned by the impact of illicit trade in Kenya, where one in ten cigarettes now smoked is illegal.

“Unfortunately, the recent declines in the incidence of illicit cigarettes originating from Kenya have been almost entirely offset by the increase in the volume of tax-evaded cigarettes coming into Kenya across the Ugandan border, which by our estimate now accounts for approximately 90 percent of all tax-evaded cigarettes sold in Kenya,” Spencer said.

“These are predominantly cigarettes comprised of non-Kenyan tobacco leaf. The illegal sales are therefore adversely impacting, not just government revenues and local manufacturers, but also Kenyan tobacco farmers by impacting demand for Kenyan leaf,” Spencer said.

“Tobacco taxes declined in 2019, despite a significant increase in excise duty. This confirms the reality that increased tobacco excise is no longer translating into increased government revenues in Kenya. Instead, it is increasing the incentive for smugglers to bring in duty-evaded products from neighboring countries and for affordability-stretched consumers to purchase smuggled products.”

“Kenya’s ratification of the WHO’s Illicit Trade Protocol (ITP) was an important step towards combatting the illicit trade, and we now urge the Kenyan authorities to increase border controls and enhance their cooperation with their Ugandan counterparts to stem the flow of these products into Kenya and stomp out the criminal tobacco trade. It’s also vital that our neighbors in the East Africa Community expedite ratification of the ITP.”

“Whilst sustainability has always been important to us, BAT Kenya’s evolved strategy places it front and center in all that we do. Our commitment to reducing the health impacts of the business is supported by a wider sustainability agenda that prioritizes environmental, social, and governance (ESG) measures, “BAT Kenya Chairman, George Maina said.

“To date, BAT Kenya has maintained its status as a zero-waste manufacturer by achieving a 100 percent waste recycling rate. On the environmental front, we have already planted over 2 million trees in the first half of 2020, adding to the more than 50 million trees planted since 1978,” Maina said.

“BAT Kenya also remains as steadfast as ever in its commitment to Kenyan agriculture, partnering with approximately 4,300 local farmers to supply tobacco for its existing cigarette business,” Maina added.

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