Illegal tobacco trade affects monopoly

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Illicit trade of tobacco is estimated to make up to 40 percent of the market in the country and greatly affecting the national Tobacco Enterprise and the country.
Contraband has been severely affecting the tobacco industry despite a recent MOU signed between the customs commission and the National Tobacco Enterprise to combat illegal tobacco trade.
An MOU was signed between the two parties back in June focusing on three pillars: intelligence, Identifying legitimate products and showing seized illegal tobacco products.
Apart from the two major brands which control 90 percent of the market, Duty free tobacco products make their way to retail shops largely via Ethiopians coming from abroad and those working for the diplomatic community.
“Anyone can get cigarettes with duty free stamps in retail shops even though they are only targeting diplomatic communities, but because of the corrupted network that exists in the enterprise and Ethiopian drivers who work for the diplomatic mission, the illegal trade is getting out of hand” said Grant Mowat, General Manager of the National Tobacco Enterprise.
Ninety percent of contraband trade which engulfed the market, was produced in in Dubai and Yemen and were shipped through Somaliland and Djibouti.
“Although we are entitled to the monopoly in principle, the illicit trade takes almost half of the market share which also has an impact on the government in terms of tax collection” adding that his company is one of the 160 companies awarded in recognition for paying their taxes properly, the manager said.
As part of efforts to combat smuggling, all cigarettes imported into Ethiopia must be marked with a National Tobacco tag.
The previously state owned National Tobacco Enterprise was recently acquired by the multinational JTI and expanded. It is Ethiopia’s only manufacturer of Tobacco.
In Ethiopia, recent data suggests that 8.9 percent of males aged between 15-49 are smokers.