About 40% of Ethiopian tobacco market is illegal


Japan Tobacco International explained at the Economist’s Illicit Trade Summit held a week ago in Addis at Hyatt Regency Hotel that 40 percent of the tobacco sold in Ethiopia is illegal.
As the trade in illegal cigarettes has mushroomed in recent years with sophisticated distribution networks across all the provinces of Ethiopia, the sales of legal, regulated and taxed cigarettes have dropped continuously.
Fady Rahme, Corporate Development Vice President for Middle East, Africa and World Wide Duty Free for Japan Tobacco International explained that illegal trade in tobacco products has a negative impact.
“It is an enormous problem of a global scope, in Ethiopia, 40% of the total tobacco market is illegal. Not only does illegal tobacco rob the government of tax revenues, it is also linked to much larger organized crimes such as corruption, the trafficking of weapons, narcotics and people, and terrorists,” he said.
“Illegal trade can only be curbed if governments and industry work together. Tobacco control and fiscal measures should be proportionate so they do not undermine the fight against illegal tobacco.’’
Debele Kebat, Commissioner of the Ethiopian Customs Commission said “the large part of the Ethiopian border encompasses extensive lowland areas which cannot be controlled by customs and the Federal Police. As a result, smugglers can easily access and cross the border with a substantial amount of smuggled goods. Millions of birr worth illegal goods enter and leave the country annually via our borders.’’
“So all stakeholders such as law enforcement bodies and regional organizations, international organizations should help us to combat illicit tobacco trading,’’ he added.
Over the past five years, the annual turnover of the NTE has continually increased by an average of 190 million birr. It offers five brands: Nyala, Gissila, Elleni, Delight and Nyala Premium. The company currently employs close to 1,000 workers.
About 10 percent of the global tobacco market involves illicit trade. The reality, though, is that illicit tobacco trade occurs even more in countries where tobacco prices are low compared to those where prices are high. Experts argue tobacco smuggling is not so much due to high cigarette taxes and prices as it is due to the existence of organized criminals, poor control of smuggling, weak enforcement of anti-smuggling laws, and corruption.